```

[Senate Hearing 108-836]
[From the U.S. Government Publishing Office]

                                                     S. Hrg. 108-836
 
                   THE FINAL REPORT OF THE DEPARTMENT

                   OF VETERANS AFFAIRS CAPITAL ASSET

               REALIGNMENT FOR ENHANCED SERVICES COMMISSION

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS

                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 2, 2004

                               __________

       Printed for the use of the Committee on Veterans' Affairs

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                 U.S. GOVERNMENT PRINTING OFFICE

21-314                 WASHINGTON : 2005
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001

                     COMMITTEE ON VETERANS' AFFAIRS

       .........................................................

                 Arlen Specter, Pennsylvania, Chairman
Ben Nighthorse Campbell, Colorado    Bob Graham, Florida
Larry E. Craig, Idaho                John D. Rockefeller IV, West 
Kay Bailey Hutchison, Texas              Virginia
Jim Bunning, Kentucky                James M. Jeffords, (I), Vermont
John Ensign, Nevada                  Daniel K. Akaka, Hawaii
Lindsey O. Graham, South Carolina    Patty Murray, Washington
Lisa Murkowski, Alaska               Zell Miller, Georgia
                                     E. Benjamin Nelson, Nebraska

           William F. Tuerk, Staff Director and Chief Counsel
         Bryant Hall, Minority Staff Director and Chief Counsel

                            C O N T E N T S

                              ----------                              

                             MARCH 2, 2004

                                SENATORS

                                                                   Page

Specter, Hon. Arlen, U.S. Senator from Pennsylvania..............     1
Murray, Hon. Patty, U.S. Senator from Washington.................     2
Rockefeller IV, Hon. John D., U.S. Senator from West Virginia....     2
Graham, Hon. Bob, U.S. Senator from Florida......................    15
    Prepared statement...........................................    15
Hutchison, Hon. Kay Bailey, U.S. Senator from Texas..............    16

                               WITNESSES

Alvarez, Hon. Everett Jr., Chairman, CARES Commission, 
  accompanied by Hon. R. John Vogel, Vice Chairman, CARES 
  Commission; and Richard McCormick, CARES Commission............     3
    Prepared statement...........................................     5
    Response to written questions submitted by:
        Hon. Arlen Specter.......................................    13
        Hon. Ben Nighthorse Campbell.............................    15
Roswell, Hon. Robert H., M.D., Under Secretary for Health, U.S. 
  Department of Veterans Affairs.................................    17
    Prepared statement...........................................    18
Wiblemo, Cathleen C., Deputy Director of Health Care, Veterans 
  Affairs and Rehabilitation Commission, The American Legion.....    40
    Prepared statement...........................................    41
Cullinan, Dennis M., Director, National Legislative Service, 
  Veterans of 
  Foreign Wars of the United States..............................    46
    Prepared statement...........................................    46
Ilem, Joy J., Assistant National Legislative Director, Disabled 
  American 
  Veterans.......................................................    48
    Prepared statement...........................................    48
Doran, James W., National Service Director, AMVETS...............    54
    Prepared statement...........................................    55
Cowell, Fred, Health Policy Analyst, Paralyzed Veterans of 
  America........................................................    57
    Prepared statement...........................................    57

 THE FINAL REPORT OF THE DEPARTMENT OF VETERANS AFFAIRS CAPITAL ASSET 
              REALIGNMENT FOR ENHANCED SERVICES COMMISSION

                              ----------                              

                         TUESDAY, MARCH 2, 2004

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3:02 p.m., in 
room 
S-207, United States Capitol, Hon. Arlen Specter, Chairman of 
the Committee, presiding.
    Present: Senators Specter, Hutchison, Graham, Rockefeller 
and Murray.

           OPENING STATEMENT OF HON. ARLEN SPECTER, 
                 U.S. SENATOR FROM PENNSYLVANIA

    Chairman Specter. Good afternoon, ladies and gentlemen. The 
hearing of the Senate Veterans' Affairs Committee will now 
proceed. We regret the inconvenience in moving from our 
scheduled hearing room in the Russell Senate Office Building. 
As you know, we are in a series of votes in the Senate and 
rather than postpone the hearing, it seemed preferable to 
reschedule for this room where Senators can exit and vote and 
come back. We are now in the middle of two of four votes this 
afternoon, after having voted three times this morning. The 
Senate votes take priority over just about everything else.
    We are proceeding today with an examination of the CARES 
Commission report, a very important report on the changes in 
providing medical care to America's veterans. We are facing a 
very difficult situation with veterans' care, with the current 
budget proposals probably requiring a cut, at least on their 
face as they have been submitted by the Administration. And 
that is in the face of a recommendation by the Secretary of 
Veterans' Affairs for an increase of some $1.3 billion.
    We will have to sort all of that out in the budget process, 
but I think there is determination in the Congress that there 
not be a reduction in the quality of medical care for America's 
veterans. We are facing a difficult situation internationally 
with the war in Iraq and the remnants of a war in Afghanistan 
and servicemen scattered around the world fighting terrorism, 
and a large detachment in South Korea.
    The President has proposed a 7-percent increase in the 
Defense budget and about a 10-percent increase in the Homeland 
Security budget. There is a direct correlation between defense 
and veterans' care at a time when there is an effort made to 
recruit young men and women to be put in harm's way, a very 
grave problem. It is hard to recruit if the young men and women 
who are being asked to enlist do not see that the veterans are 
being treated well.
    With respect to the CARES Commissions' proposals, this 
Committee will make its facilities available to all Members of 
the Senate beyond those who are on the Committee to raise 
questions about proposals that might affect hospitals in their 
own States. Earlier today, I talked to the Ranking Member, 
Senator Graham of Florida, and his colleague, Senator Nelson, 
about a field hearing that they want to have in Florida and I 
have said that that would be authorized by the Committee.
    The Committee will have field hearings in Pittsburgh, 
Altoona and Erie. If other Senators, even those not on the 
Committee, want to have field hearings, we are prepared to find 
out exactly what is going on. We are determined that there will 
not be a reduction in health care available to America's 
veterans. If it is a substitution of different forms of CARE, 
and if the substitutes are adequate or superior, then this 
Committee will entertain them.
    We know that the issue has to be passed upon by the 
Secretary of Veterans' Affairs, and that this decision will, of 
course, be subject to review by this Committee. The final word 
will be up to the Congress as to what will happen.
    We have a great many witnesses, but we have Senators here 
who doubtless want to say something, if it could be brief.
    Senator Murray, in order of arrival, would you care to make 
an opening statement?

            OPENING STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Thank you Mr. Chairman. I just want to 
welcome the witnesses today. Admiral Alvarez did an admirable 
job, I think, putting this together, but there are very, very 
deep concerns in most of our States where this is being 
effected.
    I have sent a letter to Secretary Principi regarding the 
Walla Walla facility. I do have some questions I want to ask 
you about when we get to that comment period. But, Mr. 
Chairman, I was pleased to hear you mention field hearings. I 
hope that Washington State can be considered for that. We are 
going to have a very huge impact from this. There is a lot of 
concern generated.
    Chairman Specter. Senator Murray, if you want a field 
hearing in Washington, you have got it.
    Senator Murray. Thank you very much, Mr. Chairman.
    Chairman Specter. I was a little in doubt as to whether to 
go first to Senator Murray, who arrived first, or to the 
longer-serving Senator who was Ranking Member and Chairman of 
this Committee. I opted for Senator Murray, but now I turn to 
you, Senator Rockefeller.

       OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. I am going to be very, very brief.
    Chairman Alvarez, we welcome you and all of your colleagues 
from the CARES Commission. You should know and not be surprised 
by the fact that in West Virginia, which is a land that has 
about 4 percent of our land which is flat and 96 percent which 
is going uphill or downhill, and that all people, all 
industries, all activity has to take place in that 4 percent 
virtually, the closing of the Beckley hospital is painful. Any 
closing is painful. This one is very painful.
    Our delegation is disappointed with the recommendations. We 
strongly disagree with your conclusions, but we respect what 
you have to go through and understand that tough decisions have 
to be made.
    I will only say, Mr. Chairman, that you have established 
some key factors, principles, including how will this affect 
veterans' access to health and the quality of care; what are 
the views of the veterans stakeholders in the area and how do 
you know their views; and what about the effect on the local 
community and what are the costs to the VA; and, in addition, 
are there places that they could go for health care.
    So I will be discussing and questioning a couple of those 
points, but I very much appreciate the Chairman's indulgence 
and your presence.
    Chairman Specter. Thank you very much, Senator Rockefeller.
    Our first witness is the distinguished Chairman of the 
CARES Commission, the Honorable Everett Alvarez, a 
distinguished Naval officer and Government executive best known 
as the first American aviator shot down over North Vietnam. He 
was taken prisoner of war and held in North Vietnam for some 
8\1/2\ years. He has a J.D. degree from George Washington 
University School of Law. He has served as Deputy Director of 
the Peace Corps and Deputy Administrator of the VA from 1982 to 
1986.
    Thank you, Chairman Alvarez, for your distinguished service 
in so many capacities. We have a procedure established for a 5-
minute time period, which will give the maximum amount of time 
to Senators for Q and A, and we do have a large number of 
witnesses. So we look forward to your testimony. You may 
proceed.

    STATEMENT OF HON. EVERETT ALVAREZ, JR., CHAIRMAN, CARES 
COMMISSION, ACCOMPANIED BY: HON. R. JOHN VOGEL, VICE CHAIRMAN, 
                     CARES COMMISSION; AND 
              RICHARD McCORMICK, CARES COMMISSION

    Mr. Alvarez. Thank you, Mr. Chairman and Members of the 
Committee. Mr. Chairman, my formal testimony has been submitted 
and I ask that it be accepted for the record.
    Chairman Specter. Your full statement will be made a part 
of the record, without objection.
    Mr. Alvarez. Mr. Chairman, I am pleased to be here today on 
behalf of the entire CARES Commission to present the CARES 
Commission report. With me today are two other members of the 
CARES Commission here, our Vice Chairman, John Vogel, on my 
immediate left, and Commissioner Dr. Richard McCormick, on my 
right. Also, behind me is Commissioner Charles Battaglia, who 
will be available to answer any questions.
    Mr. Chairman, I come before you today representing the 
CARES Commission. We are 16 individuals with broad experience 
in health care and veterans advocacy. I can attest that the 
commissioners recognized the enormity and importance of their 
task, which was to critique and modify a blueprint for 
enhancing the health care of as many veterans as feasible into 
the future. And let me emphasize that point, sir. The 
commission views the draft National CARES Plan as a blueprint 
for VA health care for the next 20 years.
    Health care delivery in this country is changing. VA's 
health care delivery is under change and this change needs to 
be managed carefully and respectfully. The commission sees its 
blueprint as a road map to the future, a tool to help manage 
future change.
    Within the time constraints, the commission evaluated an 
enormous amount of data. We listened to many veterans, 
providers of care and stakeholders. We had 81 site visits and 
we held 38 public hearings across the country, and focused our 
collective experience on the task.
    Our report, which you have, is large and far-reaching. It 
includes important discussions and recommendations on issues 
that cut across the entire VA health care system. It also 
includes hundreds of site-specific recommendations. If the plan 
is to succeed in its goals, priorities still need to be 
attended to and properly aligned. Evaluations still need to be 
conducted for important components of VA health care, and 
internal processes need to be overhauled.
    I wish in these opening remarks to share the principles 
that served as a beacon to guide us through our complex 
deliberations.
    First and foremost, to improve access to as many veterans 
as possible to high-quality, veteran-specific health care. The 
VA facilities were largely built 40 to 50 years ago. The 
population demographics have shifted. The delivery of health 
care has increasingly become an issue of access both for 
veterans and their families, who need to partner in their care.
    Cost of efficiency. When, as is the case today, the health 
care needs of some veterans are unfulfilled, particularly for 
the highest-priority veterans with war-related physical and 
mental disabilities, then efficiency is also an issue of access 
and quality of care. If we do not use resources as efficiently 
as we can, some veterans in dire need of services may not 
receive the care they need or deserve. Therefore, the 
commission also looked at the cost/benefit of each 
recommendation. We recognize that the costs that were provided 
were often in need of further refinement, forcing us to 
consider the likelihood, based on past experience in VHA and a 
test of reasonableness, that an action would improve 
efficiency.
    The impact of change in the status quo on current 
recipients of services, current VA employees and the 
communities where our facilities have been historically located 
was another key principle that guided the commission. The 
commission recognizes that the shifting of resources necessary 
to improve overall access will be a hardship for some. We 
expect that the implementation of necessary change will take 
this into account when time lines for modifications are 
finalized.
    The commission's recommendations are our assessment of what 
is best for VA health care as we move forward. We are not 
infallible. Things will change over time and there may be 
factors that need to be reconsidered. However, this is our best 
effort.
    We look to the Secretary and to the Congress to further 
refine and improve upon our assessment, keeping, we hope, in 
their focus the principles that have guided our deliberations 
to provide access to high-quality health care to as many 
veterans as our resources permit.
    Mr. Chairman and Members of the Committee, I would like to 
thank you for the opportunity to address you. My fellow 
commissioners and I look forward to your questions, and an 
ongoing dialog, we trust, will move all of us closer to our 
jointly held goal to serve those who have and are serving our 
country.
    Thank you, sir.
    [The prepared statement of Mr. Alvarez follows:]

           Prepared Statement of Hon. Everett Alvarez, Jr., 
                       Chairman, CARES Commission
    Mr. Chairman and Members of the Committee, good afternoon. I am 
pleased to be here today on behalf of the entire Commission, to present 
the Capital Asset Realignment for Enhanced Services (CARES) 
Commission's Report. With me today are Vice-Chairman John Vogel, and 
Commissioners Mr. Charles Battaglia and Dr. Richard McCormick.
    The Commission's journey began in February, 2003, when The 
Honorable Anthony J. Principi, Secretary of Veterans Affairs, asked the 
Commission to provide specific impartial and equitable recommendations 
for realignment and allocation of capital assets to meet the demand for 
veterans health care services over the next 20 years. As you know, Sir, 
the goal of CARES is to enhance services, not to save money--but to 
spend appropriated funds wisely. In fulfilling our obligation to 
Secretary Principi, to veterans and their families, to stakeholders and 
partners, and to the dedicated VA staff, Commissioners:
     Visited 81 VA and Department of Defense medical facilities 
and State Veterans Homes;
     Held 38 public hearings across the country, with at least 
one hearing in each Veterans Integrated Service Network (VISN);
     Held 10 public meetings;
     Analyzed more than 212,000 comments received from 
veterans, their family members, and stakeholders.
    At the public hearings, the Commission had the opportunity to hear 
from approximately 770 invited local speakers, including VISN 
leadership, veterans, veterans service organizations, State directors 
of veterans affairs, local labor organizations, medical and nursing 
school and other allied health professional affiliates, organizations 
with collaborative relationships, and local elected officials. Seven 
Governors and 135 Members of Congress participated or provided 
statements for Commission hearings.
    The CARES Commission Report is the compilation of information 
gathered at these site visits, public hearings, and meetings as well as 
information obtained from the public comments and VA. It represents the 
best collective judgment of the Commissioners, who applied their 
diverse expertise in making decisions related to the future of VA's 
infrastructure. I would like to emphasize, Mr. Chairman, that the focal 
point of the Commission's effort and report is enhancing access to 
health care for America's veterans while ensuring that the integrity of 
all VA missions is maintained, and any adverse impact on VA staff and 
affected communities is minimized.
                          commission approach
    Mr. Chairman, to assess the reasonableness of each proposal in the 
Draft National CARES Plan, the Commission developed and applied the 
following factors:
     Impact of veterans' access to health care
     Impact on health care quality
     Veterans and stakeholder views
     Economic impact on the community
     Impact on VA missions and goals, and
     Cost to the Government
    In applying these factors, the Commission evaluated each proposal 
using available data and written analysis submitted by each VISN and by 
VA's Under Secretary for Health, Dr. Robert Roswell. The Commission's 
recommendations are based on this evaluation and the knowledge gained 
through the Commission's study of VA's infrastructure and health care 
system.
                      national crosscutting issues
    Through the public meetings, site visits, hearings and informal 
meetings with individual veterans and stakeholders, the Commission 
developed a deeper appreciation for the complexity of the system-wide 
issues confronting VA and the significance of the changes proposed in 
the Draft National CARES Plan. The Commission identified a variety of 
issues that are critical to VA's success as it continues to realign and 
transform its health care system. The Commission believes that 
resolution of these national crosscutting issues is essential to 
achieve the changes the Secretary desires and to accomplish CARES goals 
for enhanced services to veterans.
    The Commission identified six national crosscutting issues. These 
are:
    1. Facility Mission Change
    2. Community-Based Outpatient Clinics
    3. Mental Health Services, which includes acute inpatient and 
outpatient services
    4. Long-Term Care, including geriatric and seriously mentally ill 
services
    5. Excess VA Property
    6. Contracting for Care
    The Commission determined that for VA to reach a successful outcome 
from the CARES process, it was essential that recommendations be 
developed for these crosscutting issues. These issues and related 
recommendations, while appearing at times to be discrete from one 
another, are in fact interdependent, and require careful integration. 
For example, facility mission changes and managing excess property 
concentrate on the realignment of capital assets. The prioritization 
and placement of community-based outpatient clinics and contracting for 
care in local communities focus on developing equitable access to 
quality health care. Similarly, the issues of mental health services 
and long-term care deal with providing access to quality services.
    Recommendations on the national crosscutting issues served to guide 
the Commission's decisionmaking as it reviewed the VISN-specific 
proposals in the Draft National CARES Plan. The Commission believes 
that these crosscutting recommendations should be the basis for 
developing national policy guidance.
    Mr. Chairman, I would now like to discuss each of the six national 
crosscutting issues.
                      1. facility mission changes
    The intent of the CARES process is to realign resources in order to 
enhance access to health care services for our nation's veterans. To 
accomplish this goal, it is critical to eliminate duplicate clinical 
and administrative services at VA facilities, increase efficiencies, 
and allow reinvestment of financial savings.
    The Draft National CARES Plan proposed consolidation of services at 
40 facilities--18 with small workload volumes (``small facilities'') 
and 22 within close geographic proximity of other facilities 
(``proximity'') or with multiple campuses (``campus realignment''). Of 
the 18 small facilities, the Draft National Cares Plan identified seven 
facilities that would convert to a new type of facility modeled after 
the Centers for Medicare and Medicaid Services designation of a 
critical access hospital. The Commission used the term ``facility 
mission changes'' to describe all recommended changes to facilities.
    As mentioned earlier, the Commission applied specific factors in 
its evaluation of each mission change proposal to assess the proposal's 
reasonableness. In applying these factors, the Commission relied on the 
broad expertise and experience of the Commission members. Further, due 
to a lack of supporting data for the Draft National CARES Plan's 
proposals on facilities with a potential mission change, the Commission 
evaluated each facility using its own factors, taking into 
consideration the unique issues in the various VISNs and issues 
associated with urban and rural areas, and utilized data in a number of 
areas such as past, present and projected VA workload; whether there 
were alternative community resources, costs; quality of care; and 
financial analyses. I should emphasize, Mr. Chairman, that the 
Commission considered access and quality of care to be the primary 
drivers in meeting the health care needs of veterans.
    Mr. Chairman, if I may, I would like to address the Commission's 
recommendations on those facilities with a potential mission change 
where the Commission did not concur in whole or in part with the Draft 
National Cares Plan.
    Before I do, Sir, I will say that the Commission did not concur 
with the Draft National CARES Plan's proposal designating seven medical 
facilities as critical access hospitals primarily because VA had not 
established a clear definition or clear policy on the critical access 
hospital designation prior to making decisions on the use of this 
designation. We understand, however, that the Under Secretary for 
Health has assembled a team of experts and a draft definition has been 
developed. The Commission has not evaluated this newly developed 
definition.
    VISN 1--Bedford, Massachusetts: The Commission did not concur with 
the change in mission at Bedford. The Commission recommended a more 
thorough study of the feasibility of building a single, replacement 
medical center in the Boston area.
    VISN 2--Canandaigua, New York: The Commission concurred with 
transferring acute inpatient psychiatry beds and that Canandaigua 
retain its ambulatory care programs. The Commission recommended that 
Canandaigua retain long-term care, including the nursing home, 
psychiatric nursing home care and the domiciliary. The Commission also 
recommended that the VISN develop another strategic plan for the 
challenges it faces in Canandaigua with high overhead costs, unused or 
underutilized buildings, and the impact on the community and employees 
and that the VISN involve stakeholders and the community to resolve 
these issues.
    VISN 3--Montrose, New York: The Commission recommended that the 
inpatient psychiatry beds and nursing home care beds be moved from the 
Montrose campus to the Castle Point campus and that the domiciliary-
based residential rehabilitation programs and the ambulatory care 
services remain at the Montrose campus.
    VISN 3--Castle Point, New York: The Commission concurred with the 
proposal to transfer the spinal cord injury beds to the Bronx. The 
Commission did not concur with designating the facility a critical 
access hospital.
    VISN 4--Pittsburgh, Pennsylvania--Highland Drive Division: The 
Commission concurred with the proposal to consolidate services at the 
Highland Drive Division of the Pittsburgh Health Care System with the 
University Drive Division and the Heinz Progressive Care Center. The 
Commission, however, recommended that VA conduct an improved life cycle 
cost analysis.
    VISN 4--Erie, Pennsylvania: The Commission concurred with the 
proposal to close inpatient surgical services at the Erie VA Medical 
Center and retain outpatient services (including outpatient surgery) 
and long-term care programs. The Commission did not concur with the 
proposal that Erie maintain the remainder of its current inpatient 
services and recommended that all acute care beds be closed as soon as 
reasonable. The Commission also recommended that VISN 4 continue its 
referral practices to the Pittsburgh Health Care System for Erie area 
veterans and that the VISN pursue available resources in the Erie 
community.
    VISN 4--Altoona, Pennsylvania: The Commission concurred with the 
proposal that the Altoona VA Medical Center maintain its outpatient 
services, as well as its long-term care programs. The Commission did 
not concur with the proposal to close Altoona's acute care services by 
Fiscal Year 2012 and recommended that acute care beds be closed at 
Altoona as soon as reasonable. The Commission also recommended that 
VISN 4 continue its referral practices to the Pittsburgh Health Care 
System for Altoona area veterans and that the VISN utilize available 
resources in the Altoona community.
    VISN 6--Beckley, West Virginia: The Commission did not concur with 
the proposal to convert the Beckley VA Medical Center into a critical 
access hospital and recommended closing the acute inpatient hospital 
beds and contracting for acute inpatient care in the community as soon 
as reasonable. The Commission also recommended that the Beckley VA 
Medical Center retain its multi-specialty outpatient services and the 
nursing home.
    VISN 7--Augusta, Georgia--Uptown Division: The Commission did not 
concur with the proposal to study the feasibility of consolidating 
selected current services at the Uptown Division to the Downtown 
Division because we found the proposed realignment to be impractical.
    VISN 8--Lake City, Florida: The Commission did not concur with the 
proposal to move inpatient surgery services at the Lake City VA Medical 
Center to the Gainesville VA Medical Center at the present time. In 
light of the projected growth of enrollees and the access gap in the 
North Market of VISN 8, the Commission recommended that any 
consideration of transfer of inpatient services from Lake City to 
Gainesville be delayed until after Fiscal Year 2012. The Commission 
concurred with the proposal to maintain nursing home care and 
outpatient services at the Lake City VA Medical Center.
    VISN 9--Lexington and Leestown, Kentucky: The Commission did not 
concur with the proposal to transfer current outpatient care and 
nursing home care services from Leestown to Cooper Drive. The 
Commission recommended that the Lexington-Leestown campus remain open 
and continue to provide nursing home, outpatient care, and 
administrative services.
    VSIN 10--Cleveland, Ohio--Brecksville Campus: The Commission 
concurred with the proposal to relocate current psychiatric care, 
nursing home care, domiciliary, and residential services from the 
Brecksville Campus to the Wade Park Campus, provided the existing level 
of services can be maintained. The Commission also concurred with the 
proposal to pursue enhanced use lease opportunities at Brecksville in 
exchange for property adjacent to Wade Park.
    VISN 11--Saginaw, Michigan: The Commission concurred with the 
proposal to discontinue acute medical services at the Saginaw VA 
Medical Center. The Commission also concurred with the proposal to 
maintain the nursing home and outpatient care at the Saginaw VA Medical 
Center.
    VISN 15--Poplar Bluff, Missouri: The Commission recommended that a 
target date be set for making a full cost-benefit analysis for 
sustaining inpatient services at the Poplar Bluff VA Medical Center 
versus contracting for such services. The Commission further 
recommended that, based on the results of that assessment, a decision 
be made regarding whether or not to close inpatient services at Poplar 
Bluff. The Commission does not concur with designating the facility a 
critical access hospital.
    VISN 16--Muskogee, Oklahoma: The Commission concurred with the 
proposal to close inpatient surgery and intensive care unit beds at the 
Muskogee VA Medical Center and that ambulatory surgery should continue 
with surgery observation beds. The Commission recommended that a more 
thorough study be conducted of meeting health care needs of the 
population through the Muskogee VA Medical Center versus using 
community resources in the Muskogee/Tulsa area. A target date should be 
set for completion of this study. In the short term, inpatient medical 
services should be sustained. Expansion of inpatient psychiatry should 
await the results of the study.
    VISN 17--Waco, Texas: The Commission concurred with the proposal to 
transfer services from the Waco campus to appropriate locations within 
the VISN as follows: (1) a portion of acute care inpatient psychiatry 
to Austin; (2) the balance of acute care and all the long-term 
inpatient psychiatry to the Temple VA Medical Center; and (3) post-
traumatic stress disorder residential rehabilitation services to the 
Temple VA Medical Center, with no decrease in capacity. The Commission 
concurred with the proposal to transfer the Blind Rehabilitation Center 
from Waco, but recommends that the VISN determine an appropriate 
location taking into account access and the Blind Rehabilitation 
Center's role as a regional rehabilitation referral center. The 
Commission concurred that a new multi-specialty outpatient clinic be 
established in the Waco area. The Commission did not concur with the 
proposal to transfer Waco's nursing home services to the community. The 
Commission recommended that time be provided for the transition to 
allow an orderly transfer with minimal disruption to patients and 
families and for the VISN to involve veterans, stakeholders, and the 
community in a plan for the Waco campus that is most beneficial to 
veterans.
    VISN 17--Kerrville, Texas: The Commission concurred with the 
proposal to transfer the Kerrville VA Medical Center's acute inpatient 
services and recommends that the VISN contract with community health 
care providers for these acute inpatient services, including urgent 
care services, in lieu of or until space is available at the San 
Antonio VA Medical Center. The Commission concurred with the proposal 
that the nursing home and outpatient services remain at Kerrville. The 
Commission did not concur with designating the facility a critical 
access hospital.
    VISN 18--Big Spring, Texas: The Commission concurred with the 
proposal insofar as it relates to studying the possibility of no longer 
providing health care services at the Big Spring VA Medical Center. The 
study should take into account the input of stakeholders regarding 
access to care. The Commission did not concur with designating the 
facility a critical access hospital.
    VISN 19--Cheyenne, Wyoming: The Commission recommended that the 
Cheyenne VA Medical Center retain its current. The Commission did not 
concur with designating the facility a critical access hospital.
    VISN 19--Grand Junction, Colorado: The Commission recommended that 
the Grand Junction VA Medical Center retain its current mission. The 
Commission did not concur with designating the facility a critical 
access hospital.
    VISN 20--Vancouver, Washington: The Commission recommended 
maintaining the current mission at the Vancouver facility, while 
reducing the campus footprint. The Commission also recommended that VA 
explore options to expand Vancouver's function, particularly with 
regard to relocating services from the Portland VA Medical Center.
    VISN 20--White City, Oregon: The Commission did not concur with the 
Draft National CARES Plan's proposal to transfer the domiciliary and 
Compensated Work Therapy programs from White City to other VA medical 
centers in the VISN. The Commission, however, agreed with the VISN-
recommended alternative that the White City Southern Oregon 
Rehabilitation Center Clinic maintain its current mission. The 
Commission did concur with the Draft National CARES Plan's proposal to 
maintain outpatient services at White City.
    VISN 20--Walla Walla, Washington: The Commission concurred with the 
proposal to close and, where appropriate, contract for acute inpatient 
medicine and psychiatry care and nursing home care in the Walla Walla 
geographic area. The Commission also concurred with the proposal to 
maintain outpatient services and recommended that outpatient care be 
moved off the Walla Walla VA Medical Center campus after inpatient 
services have been relocated.
    VISN 21--Livermore, California: The Commission concurred with the 
proposal to transfer sub-acute beds to the Palo Alto VA Medical Center, 
and that outpatient care should be shifted to CBOCs. The Commission 
recommended that the nursing home beds at the Livermore VA Medical 
Center be retained as a freestanding nursing home care unit.
    VISN 23--Hot Springs, South Dakota: The Commission recommended that 
the Hot Springs VA Medical Center retain its current mission to provide 
acute inpatient medical, domiciliary and outpatient services. The 
Commission did not concur with designating this facility a critical 
access hospital.
    VISN 23--Knoxville, Iowa: The Commission concurred with the 
proposal to move all inpatient services to the Des Moines and to retain 
outpatient services at the Knoxville VA Medical Center.
                 2. community-based outpatient clinics
    Following the VISN's submissions outlining the needs for additional 
CBOCs, the Under Secretary for Health developed criteria to organize 
proposed CBOCs into three priority groups. The Under Secretary 
indicated to the Commission that priority groups were established in 
order to constrain demand on the system. The Commission believed the 
Under Secretary's approach to determine priority groups has the effect 
of limiting access to outpatient care, which is contrary to the goal of 
CARES. It also had unintended consequences in that it inadvertently 
disadvantaged veterans in rural communities by generally placing CBOCs 
for rural areas in the second priority group because of the relatively 
small veteran populations in these markets. Further, the same 
population data used to propose a CBOC could be clustered in different 
ways yielding various results in the prioritization of CBOCs.
    VISNs also proposed new CBOCs to address overall workload issues 
and space capacity issues at parent facilities and existing CBOCs. The 
Commission learned that several facilities are currently operating at 
and over capacity for outpatient care. Proposed CBOCs that address 
space issues associated with increased workload are in the third 
priority group. Without timely development of new sites of care, 
whether designated as CBOCs or otherwise, there will be greater demand 
on existing clinic space and examination rooms, leading to inefficient 
workflow and a reduction in the total number of patients that can be 
seen in a given day. This in turn could lead to increased wait times.
    Some parent facilities also have projected growth in inpatient 
workload, requiring conversion of outpatient space back to its original 
inpatient purpose. Without the timely establishment of new CBOCs, many 
facilities will require construction to accommodate workload increases, 
a more costly solution with longer-term ramifications.
    The Commission recommended that the Secretary and the Under 
Secretary for Health use their authority to establish new CBOCs with 
the VHA medical appropriations without regard to the three priority 
groups. Also, the Commission recommended that VISNs set priorities for 
new CBOCs based on VISN needs to improve access and to respond to 
increases in workload. Additionally, the Commission recommended that 
VISNs be able to establish new sites of care to reclaim space at the 
parent facility to meet increasing demand for inpatient care. Further, 
the Commission endorses the legislative requirement and VA policy to 
include basic mental health services in CBOCs, whenever feasible. 
Finally, the Commission recommended that VISNs collaborate with 
academic affiliates to develop learning opportunities using CBOCs as 
teaching sites to enhance quality of care in community-based service 
settings.
                       3. mental health services
    The care of veterans with mental disorders is a high priority 
component of VA's health care mission. Nearly a half million veterans 
have a service-connected mental disorder.
    The National CARES Program Office recognized early in the 
methodology used to project mental health services did not accurately 
account for services provided by VA. As a result, the model projected 
decreasing requirements for outpatient mental health services while 
national projections included significant increases in outpatient 
primary and specialty care needs.
    The Commission is pleased to learn that the National CARES Program 
Office has recently completed reworking enrollment forecasts for mental 
health services. Changes to the model included ensuring that VA actual 
workload and projected workload data a re comparable and account for 
the needed mental health services for Vietnam Era veterans and those 
who follow, such as those serving in Iraq and Afghanistan. The 
Commission recommended that with the new projections, the VISNs develop 
plans to address gaps in mental health services and these plans should 
be integrated into the CARES process. As indicated in my earlier 
discussion, the Commission reinforced Congressional intent that basic 
mental health services should be provided in CBOC settings. 
Additionally, the Commission recommended that acute inpatient mental 
health services should be provided with other acute inpatient services 
whenever feasible.
                           4. long-term care
    The Commission learned that long-term care, including nursing home, 
domiciliary and non-acute inpatient and residential mental health 
services, was not included in the current CARES projections due to the 
absence of an adequate model to project future need for these services. 
Nevertheless, the Draft National CARES Plan includes a number of 
initiatives that directly impact nursing home care, domiciliary care, 
and residential and long-term mental health care.
    VA's nursing home care units vary in mission and case mix. Some 
operate as short-term medical rehabilitation units and some operate as 
traditional long-term care units. Some provide care for seriously 
mentally ill patients who also have care needs related to medical 
illnesses and dementia. The Commission noted that these patients are 
extremely difficult to place in community nursing homes, as most do not 
admit patients with severe psychiatric illness.
    The Commission heard conflicting rationale for moving current long-
term care beds. On the one hand, the Under Secretary for Health and 
certain VISN officials contended that long-term care beds should be 
located on the same campus as a tertiary care center to enhance overall 
medical care. Some proposals in the Draft National CARES Plan are 
consistent with that view. On the other hand, several proposals call 
for moving long-term care beds to campuses without medical beds, or for 
contracting with community nursing homes not connected to a hospital. 
The Commission noted that the norm for community nursing homes is that 
the nursing home facility is located away from facilities with medical 
services and, VA currently has nursing homes that are not located on 
the same campus as the medical center.
    In addition, inconsistent views have been expressed by VISNs 
concerning the extent to which community nursing homes can adequately 
provide care for veterans with serious psychiatric needs. Some VISNs 
expressed a willingness to contract for all nursing home beds, while 
others argued strongly that a sizable portion of VA nursing home 
patients could not be adequately cared for in community nursing homes.
    Due to the lack of an adequate model to project future need for 
long-term care services and because of the conflicting rationale for 
addressing long-term care needs in the VISNs, the Commission 
recommended that VA develop a strategic plan for long-term care 
services, including the long-term care for the seriously mentally ill. 
Additionally, the Commission recommended that long-term care facilities 
located away from the medical center campus should be accepted as a 
care model. Further, the Commission recommended that in developing a 
strategic plan, VA should consider broader collaboration with states to 
leverage VA and other public funding through the State Veterans Home 
programs.
    It should be noted that although there is a need for VA to complete 
a strategic plan for long-term care services, the Commission observed 
existing long-term care facilities, primarily nursing home units, that 
have poor facility conditions or require infrastructure improvements 
resolve privacy and safety issues. Recognizing this, the Commission did 
not want to disadvantage current patients in VA's long-term care 
facilities and recommended that renovations to existing long-term care 
and chronic psychiatric care units be accomplished.
                         5. excess va property
    Much of VA's vacant space is not contiguous, but consists of 
pockets of space scattered throughout the campuses, making it useless 
for other purposes. The Commission also recognized that additional 
vacant space would be created through mission changes and 
consolidations. Further, there is an unspecified amount of acreage that 
is not currently in use and numerous properties in VA's inventory are 
historically important or have historic designations.
    The Draft National CARES Plan outlines demolition and divestiture, 
particularly in the early years of the CARES implementation phase, as 
the primary methods to reduce current vacant space as well as vacant 
space that will be created through mission changes and consolidations. 
The Commission recommended that VA consider all options for divesture, 
including outright sale and transfer to another public entity.
    The Draft National CARES Plan also places significant reliance on 
the enhanced use lease process to address excess space or property. The 
Commission, however, has determined that the enhanced use lease process 
as currently structured is not effective.
    Across the country, Commissioners consistently heard testimony on 
the structural problems with the enhanced use lease process. In the 
field, there often is insufficient expertise or resources to attract 
potential investors or to navigate local zoning and land use 
requirements. Within VA, the review and approval process is arduous and 
time-consuming. The Commission, therefore, recommended that the 
enhanced use lease process be reformed to ensure timely action on 
proposals and that VA develop a more efficient process, perhaps 
creating a separate organization to pursue disposal of excess VA 
property and land.
    As previously stated, there are numerous historic properties in 
VA's inventory, many of which can no longer be used for medical care 
services. As with other types of excess property, VA must use medical 
care appropriations that could otherwise be used to provide direct 
medical care to pay for the upkeep and maintenance of property that no 
longer has a medical purpose. Rather than rely on medical care 
appropriations, the Commission recommended that VA seek a separate 
appropriation for historic preservation funds to stabilize and maintain 
historic property.
                        6. contracting for care
    VA uses contracting as one vehicle for improving access to care and 
has significantly expanded access to care with CBOCs. The benefits of 
contracting for care in the community are it can add capacity and 
improve access faster than can be accomplished through a capital 
investment; it provides flexibility to add and discontinue services as 
needed; and it allows VA to provide services in areas where the small 
workload may not support a VA infrastructure, such as in highly rural 
areas.
    The Commission concurs with the Draft National CARES Plan's 
proposal to utilize contracts for care in the community to enhance 
access to health care services. However, before taking action to alter 
existing VA services, VA must ensure that there are viable alternatives 
in the community. Additionally, the Commission recommends that the 
Secretary ensure that VA has quality criteria and procedures for 
contracting, and monitoring service delivery, as well as the 
availability of trained staff to negotiate cost-effective contracts.
    Mr. Chairman, there are six additional issues that are 
distinguished from these national crosscutting issues in that they are 
relevant in selected VISNs, rather than in most or all of the VISNs. 
These issues are no less significant to any other issues we reviewed 
and I would like to briefly address the recommendations for each of 
them.
1. Infrastructure and Safety
    VA has identified 63 medical centers requiring seismic correction. 
Many of these medical centers are large facilities located in high 
population density areas. Of this total, the Draft National CARES Plan 
has prioritized 14 sites that require immediate seismic strengthening 
for a total funding requiring of $560.8 million. The Commission 
recommended that Secretary Principi seek necessary funding to correct 
documented seismic/life safety deficiencies as soon as possible.
2. Education and Training
    Although VA has transformed from a primarily inpatient delivery 
model to a community-based outpatient delivery system, generally 
speaking, medical schools and other clinical affiliates have not made 
the transition from the traditional inpatient teaching modalities to 
incorporate community-based outpatient primary and specialty care 
delivery into their educational programs. The Commission, therefore, 
recommended that VA and its academic affiliates develop a plan to add a 
community-based outpatient component to existing and new education and 
training sites.
    Additionally, in light of VA's significant involvement in nursing 
education and the dramatic impact the nursing shortage has on VA's 
ability to provide access to quality care for veterans, the Commission 
believes there is strategic value to formalizing the relationships 
between VA and schools of nursing. The Commission recommended that VA 
establish national policy guidance for schools of nursing comparable to 
the medical school model and actively promote nursing school 
affiliations, as well as affiliations with other health profession 
educational institutions.
3. Special Disability Programs
    The Commission found that VA uses a hub and spoke model to care for 
spinal cord injury and disorder patients. Patients travel to the 
``hub'' tertiary hospital for inpatient care or complex services. For 
more routine services, patients receive care at regional ``spoke'' VA 
medical centers. Similarly, VA's Blind Rehabilitation Centers are 
structured to serve blind veterans in an inpatient environment.
    The addition of two blind rehabilitation centers in VISNs 16 and 22 
will assist blind veterans throughout the country. The Commission 
believes inpatient settings are not the only solution, particularly 
because many blind veterans do not require a residential program. 
Rather, a more appropriate response to serving many blind veterans is 
to provide rehabilitation and retraining in community or home settings. 
As such, the Commission recommended that VA develop new opportunities 
to provide blind rehabilitation in outpatient settings close to 
veterans' homes.
    For Spinal Cord Injury Centers, there is no strategic approach to 
balancing the mix of acute and LTC beds. The Commission believes the 
proposed addition of four spinal cord injury centers and additional 
beds in four other locations will benefit many veterans. The 
Commission, however, recommended that VA assess their acute and long-
term spinal cord injury bed needs to provide the proper balance of 
these beds.
    The Commission also recommended that VA coordinate among VISNs the 
placement of special disability centers to optimize access to care for 
veterans.
4. VA/Department of Defense (DoD) Collaboration
    The Commission reviewed a wide range of VA/DoD sharing initiatives 
across the country and found varying degrees of support and momentum 
for their completion. At those sites with successful initiatives, the 
Commission noted a clear, mutual commitment to the value of the 
collaboration, dedication from the top local leadership to the making 
the collaboration work, and a sustained effort to monitor and manage 
the day-to-day activities. From its review, the Commission recommended 
that to ensure a successful collaborative relationship between DoD and 
VA, there must be clear commitment from their top leadership, both to 
the initial establishment of collaboration and to its ongoing 
maintenance, especially when there is a change in the local leadership.
5. Research Space
    The Draft National CARES Plan includes more than 20 research 
leases, new construction and enhanced use lease. The Commission notes 
that VA has excelled in this core mission and, therefore, concurred 
with the proposals for enhancing research space.
6. Care Delivery Innovations
    VA has undertaken a number of changes in care delivery designed to 
enhance access to services. Primary among them are CBOCs. However, the 
use of advanced practice nurses and telemedicine are two other 
illustrations of new approaches to delivering care.
    Veterans reported a high satisfaction with the care provided by 
advanced practice nurses and access was clearly enhanced when wait 
times were reduced, services were brought closer to where veterans 
live, and continuity of care was enhanced.
    The Commission also observed telemedicine to be an effective tool 
to enhance access to care and leverage clinician productivity 
especially for veterans living primarily in rural areas and in 
locations where specialty medical are not readily available.
    The Commission recommended that VA use advanced practice nurses and 
telemedicine to enhance access and quality of care, and urges wider 
application of these resources throughout the system. Furthermore, the 
Commission believes that this does not have to be limited to only 
advanced practice nurses but should include other critical health care 
professionals such as pharmacists, physician assistants, and other 
health care team members.
                                closing
    Mr. Chairman, I have highlighted significant recommendations from 
the Commission's Report. I would like to conclude my testimony today by 
saying that there were cases where the Commission came to a different 
conclusion than the Draft National CARES Plan. However, the driving 
force for the VISNs and the Commission was enhancing medical services 
to veterans. The Commission strongly believes that it is good public 
policy that VA continue to integrate the CARES process into its 
planning, budget, and legislative cycles.
    Mr. Chairman and Members of the Committee, I would like to thank 
you for the opportunity to address you. That concludes my formal 
remarks. My fellow Commissioners and I would be pleased to answer any 
questions.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Arlen Specter 
                 to the Department of Veterans Affairs
    Question 1. Now that you have had the opportunity to review the 
CARES Commission's report and have seen how it differs from your Draft 
National CARES Plan, do you feel the Commission's report adequately 
meets the needs of all veterans? Do you have any reservations with 
respect to the Commission's rejection or modification of some of your 
recommendations?
    Response. The CARES Commission undertook a monumental task in 
reviewing the Draft National CARES Plan and completing their task in 
the timeframe allowed them. After an intensive careful review of the 
Commission's findings and recommendations, VA is confident that they 
were carefully studied and are strategically sound. On May 7, 2004, the 
Secretary formally accepted the CARES Commission Report. He will, 
however, use the flexibility it provides to minimize the effect of any 
campus or service realignment on the continuity of care to veterans 
currently receiving services in those locations. The CARES Commission 
Report and the Secretary's decision document comprise a blueprint for 
VA's future that will effectively guide us forward. It will be VA's 
reference and initial point of departure for all future planning.
    Question 2. The Draft National CARES Plan applied a ``Critical 
Access Hospital'' (CAH) designation to many small facilities that 
furnish acute hospital care in rural or less densely populated areas. 
The Commission was critical of that feature of your recommendations, 
stating that you had not developed a clear definition or criteria for 
the establishment of CAHs. What are your thoughts on the Commission's 
disagreement with your concept of initiating a CAH model in VA? Is VHA 
attempting now to clarify its conception of the CAH concept?
    Response. The CAH concept is a framework used by the Centers for 
Medicare and Medicaid Services for assessing the future of small 
facilities. However it became apparent that we would have to customize 
this framework for VA small facilities. The DNCP indicated that 
``[o]ver the course of the next year, the VA will develop and implement 
policies to govern the operation of acute beds in small VA facilities, 
which may fit into a CAH-like model of health care delivery.'' We have 
begun that process and expect to complete criteria and policy for 
Veterans Rural Access Hospitals by July. The policy and criteria will 
adapt the CAH concept to the VA health care system.
    Question 3. As you know, many of those older veterans rely heavily 
on prescription medications for daily health maintenance. The Draft 
National Plan and the Commission report include plans to add more 
Community Based Outpatient Clinics, but neither specifies plans to 
increase the number of Consolidated Mail Out Pharmacies (CMOP) to 
provide medications for these patients. Without new mail-out pharmacy 
space, how will VA handle an increased patient pharmacy load? Are you 
considering adding additional CMOP capacity?
    Response. VA continues to increase the capacity of its existing 
Consolidated Mail Outpatient Pharmacies (CMOPs) by upgrading equipment, 
introducing State of-the-art technology and disseminating best 
practices across the entire CMOP operation. During fiscal year 2004, 
these improvements are expected to increase capacity from 83.8 million 
to 93.8 million prescriptions per year (a 12 percent increase).
    Additionally, VA has numerous initiatives planned that include the 
implementation of a central CMOP data base that will allow more 
efficient distribution of workload across VA's seven CMOPs. This will 
allow for dynamic data management in support of planned specialization 
of CMOP dispensing across all seven facilities, with a goal of 
maximizing productivity and efficiency. In addition, this allows for 
further use of direct-to-manufacturer outsourcing on difficult to 
process goods such as dietary supplements, which will allow VA to 
increase its prescription fulfillment capacity without additional 
capital investment.
    During fiscal year 2004, VA expects to increase the number of 
prescriptions for chronically used medications dispensed in 90-day 
supplies. This strategy of workload management has been successful in 
recent years. In fiscal year 2003, VA dispensed 108 million 
prescriptions, which equates to 200 million 30-day equivalent 
prescriptions. This strategy allowed VA to fill an additional 92 
million prescriptions than would otherwise have been the case.
    VA is planning increases to CMOP capacity through replacement of 
existing facilities. The CMOP-Dallas facility replacement will soon 
begin. This newest generation automated dispensing system will increase 
CMOP Dallas capacity by a projected 10 million Rx/year over the current 
7 million Rx/year.
    The approved replacements of the Bedford and West Los Angeles CMOPs 
are underway. It is anticipated that these two replacements will 
increase CMOP capacity by a combined additional 20 million Rx/year. 
Both replacements should be operational by the end of calendar year 
2005. Planning and assessment for CMOP upgrades and replacements beyond 
Dallas, Bedford, and West Los Angeles are ongoing. As future needs are 
identified, proposals will be made for review and consideration.
    Question 4. There are concerns that the data used in the CARES 
analysis ignore current military realities and do not plan for the 
possibility of future wars. Do you believe the data accurately assess 
the needs of tomorrow's veterans? Can such data be developed?
    Response. The CARES forecasting model uses DoD-supplied forecasts 
of military discharges over the 20-year forecasting period. We expect 
that as 000 strategic projections of military realities change, the 
forecasts of future discharges will change as well. We will incorporate 
any such changes into our future strategic planning initiatives to 
assess any needed modifications to the care we must provide.
    As of May 19, 2004, over 21,000 veterans of Operation Iraqi Freedom 
and over 4,306 veterans of Operation Enduring Freedom have received 
health care from VA for a wide variety of health problems. Thus far, 
their health problems have been similar to those found in other young 
military populations seeking health care.
    Question 5. The CARES process has not assessed VA's abilities to 
provide--or veterans' needs for--long-term care and psychiatric care. 
Why was this decision made? Who made it? Does VA plan to conduct a 
``CARES-like'' analysis of long-term care and psychiatric care issues? 
If so, when can we expect such a process to take place?
    Response. The DNCP does contain forecasts of acute inpatient 
psychiatry and outpatient psychiatry. The outpatient psychiatry 
forecasts were problematic and as a result they were divided into 
markets that showed growth and markets that showed declines in the 
demand forecasts. The forecasts for growth markets were included and 
the forecasts in markets that showed declines were ``flat lined'' or 
held at current capacity until the forecasts could be improved. That 
improvement is almost completed.
    Long-term psychiatry and domiciliary bed forecasts were not 
adequately addressed in the models and were held constant until the 
models could be improved. The improvement of these models is almost 
completed. The long-term care planning model used by VA until the CARES 
process was determined to be inadequate for strategic planning in 
CARES. There was no assessment of the impact of the healthier future 
elderly population, female veterans, the substitution of Assisted 
Living or home care. Furthermore, the model did not include the latest 
survey data that reflect changes in the overall delivery of long term 
care in the US health care system.
    Recognizing the importance of critical renovations, 38 nursing home 
projects were included in the DNCP, pending finalization of a long term 
care policy and incorporation into the strategic planning model. Once 
these data are finalized, VA will develop a revised long-term care 
policy.
    Question 6. Many of your CARES recommendations would involve the 
use of VA's authority to lease out space, land, or buildings to private 
companies and then use the revenue to provide care to veterans. 
Inasmuch as you have yet to analyze the VA's needs for long-term care 
space or psychiatric care facilities, do you believe it is wise to 
begin leasing out buildings or property before that analysis is 
complete?
    Response. Although The CARES Commission report recommends that no 
expansion or replacement of facilities occur while the plan for long-
term care is being developed, it does acknowledge that VA should 
proceed with VA ``renovations. . .to improve safety and maintenance of 
the facilities infrastructure and to modernize patient areas.'' We 
agree with the Commission that safety and maintenance of infrastructure 
is a paramount consideration, and we will take necessary action to 
ensure patient safety.
    We believe that using VA's enhanced use lease authority involves 
similar considerations. Pending completion of our analysis for long-
term care and psychiatric care needs, we must continue to consider on a 
case-by-case basis opportunities to lease out buildings and property 
and take advantage of those opportunities where we believe they will 
immediately benefit delivery care to our patients.
    The forecasts of long-term care space needs will be completed prior 
to the implementation phase of the CARES process, which will include 
development of plans for leasing land and buildings. In addition, while 
the enhanced use leasing process was recently streamlined by Public Law 
108-170, it allows adequate time to ensure that any plans to use vacant 
space reflect needed capacity for long term care.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Ben Nighthorse Campbell 
                 to The Department of Veterans Affairs
    Question 1. I understand that you are working out solutions for 
VISN's that did not receive favorable recommendations. Can you tell me 
if this will negatively affect those VISN's who have received positive 
recommendations? When do you expect the final recommendations to be 
approved?
    Response. The Secretary published his CARES decision on May 7, 
2004. The review process took into consideration all aspects of the 
Commission's recommendations to ensure that the CARES Plan approved by 
the Secretary treats all VISNs equitably, in accordance with national 
policy decisions.
    Question 2. I notice that the CARES Commission recommends that 
before any action is taken on expanding or renovating long-term care 
facilities, the VA should develop a long-term care strategic plan, 
including the long-term care of our mentally ill veterans. When do you 
think this plan will be developed?
    Response. The Long-term Care Model will be incorporated into the 
next strategic plan. Updates for the 5-year capital plan will be 
regularly completed. It will include a plan for the long-term 
psychiatric care. The long-term care planning that will be developed 
through the mental health strategic planning process will be carried 
out collaboratively between VA's Mental Health and Geriatrics and 
Extended Care staff to ensure that the comprehensive (psychiatric and 
medical) care needs of older veterans are met.
    The CARES Commission report does acknowledge that VA should proceed 
with VA ``renovations. . .to improve safety and maintenance of the 
facilities infrastructure and to modernize patient areas.'' However it 
recommends that no expansion or replacement of these facilities occur 
while the plan for long-term care (Nursing Homes, Domiciliary care, and 
long-term psychiatric care) is being developed.

    Chairman Specter. Thank you very much, Chairman Alvarez.
    We have been joined by the distinguished Ranking Member, 
Senator Graham.

                 STATEMENT OF HON. BOB GRAHAM, 
                   U.S. SENATOR FROM FLORIDA

    Senator Graham. Thank you very much, Mr. Chairman. I would 
like to ask unanimous consent to submit for the record an 
opening statement. In deference to the members of the 
commission who are here and our desire to hear their evaluation 
of the CARES program, I will defer presenting it.
    Chairman Specter. Without objection, your statement will be 
made a part of the record in full.
    [The prepared statement of Senator Graham follows:]

    Prepared Statement of Hon. Bob Graham, U.S. Senator from Florida
    At the outset, I would like to extend my thanks to the 
Commissioners and staff who have worked tirelessly to comment on plans 
for the VA health care system in the future. The CARES Commission 
Members have held ten public meetings and 38 public hearings, visited 
an astonishing 81 facilities, and received more than 212,000 public 
comments. Mr. Alvarez, you and your Commissioners truly had a difficult 
job--made more difficult, in my opinion, by a flawed VA plan.
    The VA's Draft National Plan--essentially vindicated by the 
Commission--does hold much promise for my state, where new and improved 
health care facilities are greatly needed. The Commission's report to 
the Secretary includes a proposal to build a new VA hospital in 
Orlando, which CARES has identified as ``having the largest workload 
gap and greatest infrastructure need of any single market in the 
country.''
    The Plan also calls for the construction of new bed towers at the 
Gainesville and Tampa VA facilities; significant renovations at Bay 
Pines; a new inpatient venture with the Department of Defense in 
Jacksonville; and a new satellite outpatient clinic and expanding 
opportunities for hospital contracts in the Ft. Myers area. One area 
which may require additional attention is the Pensacola region. 
Documentation included in the Draft National Plan refers to a new 
``Eastern Southern Hospital'', but nothing in the CARES recommendations 
provides details. The Pensacola area obviously lacks sufficient 
inpatient capability. This clearly needs our further review.
    And while I am very glad that our State will get these much-needed 
improvements, I remain concerned about the effects of the CARES process 
on the rest of the nation. The Commission's report refines the 
Administration's work--deviating from their recommendations in 12 cases 
and concurring in 16 cases--for a total of 20 major mission changes, 
including complete closures. This could have a significant impact on 
the availability of health care to our nation's veterans.
    CARES began with an amazing amount of attention paid to the 
comments of stakeholders. Unfortunately, the process took a wrong turn 
along the way. Halfway into the process, two dozen facilities were told 
to go back to the drawing board and present new plans for closures and 
reductions. The requests for these revisions came through last-minute 
phone calls and internal mandates. I trust that Commissioners were 
aware of this back-door manipulation and adjusted their analysis 
accordingly.
    The Administration's Draft National Plan also deliberately excluded 
the potential for needed long-term care and outpatient mental health 
treatment. Despite VA's historical role in caring for these special 
populations, VA has chosen to ignore demand for these two services. 
This makes no sense whatsoever. Any plan of the proposed scope of what 
the Commission is looking at must address these elements. While VA has 
described the draft plan as ``being neutral'' on long-term care and 
mental health, it is hardly the case. Thousands of long-term care and 
inpatient psychiatric beds may likely be closed--a result that cannot 
be characterized as neutral. I know that Commissioners were made aware 
of this flaw but did not, and could not, revamp the entire plan in 
order to fix it.
    Finally, if sufficient resources are not dedicated to CARES 
enhancements, the entire process will ultimately be interpreted as just 
one more blow to veterans. Indeed, the cost of CARES improvements will 
total more than $4.6 billion. With a mere $180 million included in the 
President's budget for these types of projects, we certainly have a 
long way to go to deliver upon the promise of CARES--in Florida and 
across the country.
    Thank you.

    Chairman Specter. Senator Hutchison, would you care to make 
an opening statement?

        OPENING STATEMENT OF HON. KAY BAILEY HUTCHISON, 
                    U.S. SENATOR FROM TEXAS

    Senator Hutchison. Thank you, Mr. Chairman. I do have an 
opening statement. This is a very important topic, but since we 
do have Members here and I know we are voting right now, I will 
incorporate my opening statement into my questions. I do hope 
we will have enough time in our question sessions to be able to 
do that so that we can hear from our witnesses.
    Chairman Specter. Senator Hutchison, we will see to it that 
you have sufficient time.
    Senator Hutchison. Thank you.
    Chairman Specter. Our next witness is the Honorable Robert 
Roswell. Dr. Roswell is the Under Secretary of Health for the 
Department of Veterans Affairs. Prior to his nomination, Dr. 
Roswell served as the head of VA's health care network for 
Florida and Puerto Rico. He is a 1975 graduate of the 
University of Oklahoma School of Medicine. He served on active 
duty in the Army from 1978 through 1980 and is currently a 
Colonel in the Army Reserve Medical Corps.
    Thank you for joining us, Dr. Roswell, and we look forward 
to your testimony.

       STATEMENT OF HON. ROBERT H. ROSWELL, M.D., UNDER 
   SECRETARY FOR HEALTH, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Dr. Roswell. Thank you, Mr. Chairman and Senator Graham. It 
is a pleasure to be here before the Committee today.
    On February 12 of this year, the commission presented its 
final report to the Secretary, with findings and 
recommendations. VA is currently reviewing the CARES Commission 
report. However, we must await the Secretary's final decision 
on this comprehensive report later this month. Thus, I would be 
unable to give our responses to the commission's 
recommendations to you today.
    Since the preparation, though, of the draft National CARES 
Plan, I would like to share with you that we have continued our 
planning efforts. Our initial forecast models did not fully 
address the future long-term care needs of veterans. As a 
result, the CARES planning model ensured that long-term care 
capacity was maintained at its current level.
    Since release of the draft National CARES Plan, we have 
been working to develop a long-term care demand model based on 
more recent and more complete information, including current 
national long-term care survey criteria, disability data and 
reliance factors. Also, we are viewing VHA long-term care 
policy in key areas to assure that policy and capital planning 
will be coordinated, and that policy supports the vision of 
providing veterans with the highest-quality long-term care in 
the most supportive, least restrictive environment that is 
compatible with the veteran's medical condition.
    With regard to mental health programs, VHA is developing a 
comprehensive mental health strategic plan to transform its 
mental health programs consistent with the recommendations 
contained in the President's New Freedom Commission Report on 
Mental Health. This plan will recommend fundamental changes in 
the structure, policy and culture of our mental health care 
delivery system.
    As a part of the plan, VHA is creating a vision for 
delivery of care to veterans with mental illness and substance 
abuse within a system that places equal importance and emphasis 
on mental and physical health and is an integrated, veteran-
centered program and is based on a model of recovery.
    I have instructed VHA planners to assure that programs in 
our domiciliary structures are focused on residential 
rehabilitation and that each patient have an individual 
clinical treatment plan. As each program, such as our mental 
health, substance abuse and long-term services, defines its 
discrete capacity for residential rehabilitation, VHA will have 
a more complete picture of the total capacity requirement for 
our domiciliaries.
    Mr. Chairman, we are also reviewing the critical access 
hospital concept that was presented in the draft National CARES 
Plan and are developing a definition of what we now call 
veterans rural access hospitals and how such facilities should 
function in our health care delivery system. These facilities 
will be important in providing access to health care in rural 
markets where access to VA and/or community care is limited.
    Mr. Chairman, should the Secretary approve the final CARES 
plan, implementation will take place over a period of many 
years. The complexity of realigning clinical services and 
campuses necessitates careful planning in order to assure a 
seamless transition in services. In no case will we discontinue 
services without having alternative services and sites of care 
available and operational.
    Throughout the implementation process, we will keep you and 
other Members of Congress informed and involved. And just as 
important, we will keep our patients and their families 
informed and involved in the process.
    This concludes my opening remarks. I would be happy to try 
to answer any questions you or Members of the Committee may 
have.
    [The prepared statement of Dr. Roswell follows:]

  Prepared Statement of Hon. Robert H. Roswell, M.D., Under Secretary 
            for Health, U.S. Department of Veterans Affairs
    Mr. Chairman and Members of the Committee: I am pleased to appear 
before the Committee to discuss the Department's ongoing efforts with 
regard to CARES.
    The CARES process has involved one of the most comprehensive 
evaluations of the VA health care system ever conducted. It is a data-
driven planning process designed to project future demand for health 
care services in 2012 and 2022, compare them against the current 
supply, and identify the capital requirements and the asset 
realignments VA needs to improve access, quality, and the cost 
effectiveness of the VA health care system.
    Last September, Secretary Principi and I appeared before this 
Committee to discuss both the CARES process and the VHA draft National 
CARES Plan. At that time, the CARES Commission, under the superb 
leadership of Everett Alvarez and John Vogel, was nearing the end of 
its site visits and public hearings and was preparing to begin the 
daunting task of writing its report. On February 12 of this year, the 
Commission presented its final report to the Secretary, with findings 
and recommendations.
    VA is currently reviewing the CARES Commission Report. However, we 
must await the Secretary's final decision on this comprehensive report 
later this month. Thus, I will be unable to give you our responses to 
the Commission's recommendations today.
    Mr. Chairman, we know that many stakeholders have expressed 
concerns about how VA intends to address the provision of long-term 
care and mental health services, and the Commission raised questions 
about our proposal for ``critical access hospitals.'' I would like to 
say just a few words on these issues.
    Our initial forecasting models did not adequately address the 
future long-term care needs of veterans. As a result, the CARES 
planning model ensured that current long-term care capacity was 
maintained. Since release of the draft National Cares Plan we have been 
working to develop a long term care demand model based on more recent 
and more complete information, including current national long-term 
care survey criteria, disability data and reliance factors. Also, we 
are reviewing VHA long term care policy in key areas to assure that 
policy and capital planning will be in synch and that policy supports 
the vision of providing veterans with the highest quality long term 
care in the most supportive, least restrictive environment that is 
compatible with the veteran's medical condition and personal 
circumstances.
    In regards to Mental Health Programs, VHA is developing a 
comprehensive mental health strategic plan to transform its mental 
health programs consistent with the recommendations contained the 
President's New Freedom Commission Report on Mental Health. This plan 
will recommend fundamental changes in the structure, policy, and 
culture of our mental health care delivery system. As part of the plan, 
VHA is creating a vision for delivery of care to veterans with mental 
illness and substance abuse within a system that places equal 
importance and emphasis on mental health and physical health, is 
integrated, veteran-centered, and based on recovery.
    Developing a mental health demand model that accurately projects 
the full range of mental health services needed by veterans has been 
challenging. A revised model that is more detailed and improves on past 
efforts is currently being developed. The resulting options for mental 
health care will ensure that VHA maintains a robust system of 
coordinated, integrated, ``state-of-the-art'' care for veterans with 
mental health care needs.
    We have conducted several studies of domiciliary programs over the 
past year. These studies highlighted----
     The need for effective coordination with non-VA programs 
and services to assure that integration is achieved across a continuum 
of care that is directed to meet the specific needs of individual 
veterans.
     That patients need to move to the least restrictive 
environment consistent with their needs.
     And that data based population planning is needed to bring 
about some uniformity of access to this therapeutic residential care 
continuum including consideration of available State Home Domiciliary 
programs as well as innovative VA/community partnerships providing 
Domiciliary services.
    Accordingly, I have instructed planners to assure that programs in 
domiciliary structures are focused on residential rehabilitation and 
that each patient have a clinical treatment plan. As each program (e.g. 
mental health, substance abuse, long term care) defines its discrete 
capacity for residential rehabilitation, VHA will have a more complete 
picture of the total capacity requirement for domiciliaries.
    Mr. Chairman, we are also reviewing the ``critical access 
hospital'' concept that was presented in the draft national plan and 
are developing a definition of what we now call ``rural access 
hospitals'' and how such facilities should function in our health care 
delivery system.
    We believe that these facilities may be important in providing 
access to health care in certain rural markets where access to VA and/
or community care is limited. Such facilities would need to be part of 
a network of health care that provides an established referral system 
for tertiary or other specialized care not available at the rural 
facility. The facility should also be part of a system of primary 
health care (such as a network of CBOCs). Such facilities would also 
need to be a critical component of providing access to timely, 
appropriate and cost-effective health care for the veteran population 
served.
    Mr. Chairman, should the Secretary approve the final CARES Plan, 
implementation will take place over a period of many years. It will be 
a multifaceted process, depending upon whether implementation of 
specific initiatives requires additional capital, recurring funding, 
primarily policy changes, or realignments. In particular, the 
complexity of realigning clinical services and campuses necessitates 
careful planning in order to ensure a seamless transition in services. 
In no case will we discontinue services without having alternative 
sites of care available and operational. And throughout the 
implementation process we will keep you and other Members of Congress 
informed and involved and, just as important, we will keep our patients 
and their families informed and involved.
    This concludes my statement. I will now be happy to answer any 
questions that you or other Members of the Committee might have.

    Chairman Specter. Thank you very much, Dr. Roswell. I am 
glad to hear your assurances that long-term care will be 
maintained at the current level and there will be no 
discontinuance of services.
    Chairman Alvarez, with respect to what is proposed to 
happen in Pittsburgh, there is a $100 million construction 
project at Pittsburgh University Drive and Pittsburgh Heinz, to 
be followed by the closing of Pittsburgh Highland Drive. Are 
you in a position to assure this Committee and the veterans who 
receive their care in Pittsburgh that the substitution will 
result in at least equal, if not better, care for the 
Pittsburgh veterans?
    Mr. Alvarez. Mr. Chairman, the commission looked at that 
very carefully and with regard to the $100 million, one of the 
recommendations was that they take another look at the cost of 
that because the numbers we had, we felt, were soft. We feel 
that it may be a little more than that, but the reality is that 
those numbers will be solidified.
    With regard to transferring to the university level, we 
stated in our recommendation that no transfer be done until the 
facility at the university----
    Chairman Specter. Chairman Alvarez, I don't want to 
interrupt you, but we have a very limited amount of time. Let 
me ask you to supplement what you have said in writing with a 
specification as to what services will be lost by the closing 
and what services will be gained.
    Mr. Alvarez. Will do, sir.
    Chairman Specter. Moving on to other facilities, there is a 
concern that when you close inpatient beds that there will be 
an inevitable consequence that other Pennsylvania institutions 
such as Altoona, Butler and Erie--that there will be a closure 
of emergency room and intensive care unit capabilities which 
cannot be maintained without the inpatient beds.
    Taking a look first at the ripple effect on Erie, where 
there are about 800,000 applications per year for treatment in 
the emergency room, the Erie VA has an intake of about 1,000 of 
those individuals, and only 71 need to be referred to the local 
community hospital for services not offered at the VA.
    If the VA loses its inpatient beds and then the emergency 
room private referrals will rise from the 71, which we have had 
the experience on, to 1,000, won't that result, if my 
underlying facts are correct, in a substantial increase in cost 
to the Veterans Administration?
    Mr. Alvarez. I think Dr. Roswell can probably address that 
one better, but our concern was that they take a good look at 
that as the transfer is being planned, because what we 
basically specified was that we recommend that they do it 
carefully, if they do it, so that there is no loss of service 
there.
    Chairman Specter. Well, I am glad to hear there will be no 
loss of services, but would you please supplement what you have 
said now? We are going to have a hearing in Erie in March 26. I 
will be there, the Committee will be there, and I would like to 
know the specifics as to how the services will be given and 
what the cost will be to the Veterans Administration and 
whether you really will be saving money.
    There have been efforts all along the VA system, and I will 
be detailing those as to these three facilities, to increase 
efficiencies. You talk about population shifts and 
efficiencies, and I agree with you that those are the 
standards.
    But if you take a look at Erie, in 1997 the Erie VA had 26 
inpatient beds and 9 surgical beds to provide care for 11,400 
veterans. Those medical and surgical bed units have been merged 
into a single 26-bed unit and now serve some 18,500 veterans.
    With those kinds of efficiencies, and taking into account 
the population shift, Chairman Alvarez, doesn't it make sense 
to keep open the inpatient beds which are now remaining and 
have been consolidated at Erie?
    That will be final question because I intend to observe the 
time limits, as we all will, but you may answer.
    Mr. Alvarez. Thank you, sir. I would answer any specifics 
you would care for us to submit.
    With regard to the number of visits, most of those, 94 
percent of those, are outpatient, sir. And the number of 
inpatient beds that we have is one that is a declining number 
over the last several years. That was one of the things that we 
were concerned about when we looked at the statistics.
    Chairman Specter. Well, my time has expired. We will come 
back. I am going to yield now to Senator Graham and when I 
yield to him I am going to go to vote. Senator Murray has 
already returned, and when Senator Graham finishes his 
questioning, Senator Murray, we will turn to you so that we can 
continue apace even though we will be moving in and out on the 
votes.
    Senator Graham. Mr. Chairman, we are on the second bell on 
this vote. If it is acceptable, I would like to defer to 
Senator Murray and I will vote and then ask my questions at a 
later time.
    Chairman Specter. I think that is a splendid idea. That 
way, you run no risk of missing the vote.
    Senator Murray.
    Senator Murray. Thank you very much, Mr. Chairman. Thank 
you, Senator Graham. Thank you again to the panel. I appreciate 
you being here.
    As you know, as I stated, I have written to Secretary 
Principi several times about my concerns on this. Dr. Roswell, 
I have outlined those concerns actually several times in 
writing to both you and Secretary Principi since the time my 
VISN director was directed to close three of the five VA 
medical centers that were in Washington State.
    The CARES report recommends a significant mission change at 
Walla Walla VA Medical Center in my home State of Washington. 
However, the current law which I have a copy of here stipulates 
that no mission change shall occur at this facility. In fact, 
the current law says the mission of the Veterans Administration 
Medical Center at Walla Walla, Washington, shall not be changed 
from that in existence on January 1, 1987. Yet, your CARES 
Commission recommends that it be changed.
    How do you plan on reconciling that situation?
    Dr. Roswell. Senator Murray, I am no legal expert, but we 
did refer that law to our general counsel for interpretation 
and I believe the Department's general counsel's interpretation 
was that because that law was a part of the appropriation 
language--it may not have been appropriation language; I may be 
mistaken with that.
    As I recall, the general counsel opinion was that that law 
pertained only to the mission during the term of the 
authorization and/or appropriation bill. I guess it was----
    Senator Murray. It was 1987.
    Dr. Roswell. It was 1987. I actually recall that law at the 
time of its passage, but the general counsel interpretation was 
that it would only pertain to the fiscal year in which it was 
enacted. Again, that is a general counsel opinion. That is not 
my opinion.
    Senator Murray. Well, we will continue that discussion with 
you.
    The recommendation for the Walla Walla center is to 
maintain outpatient services by moving outpatient care off of 
the Walla Walla VA Medical Center campus. Can you explain to us 
what that means? Are we going to build a new facility for Walla 
Walla?
    Dr. Roswell. The Walla Walla campus, as you know, is a 
fairly large campus. We would not be expected to maintain the 
entirety of the campus to provide just outpatient care. So my 
understanding would be that we would evaluate where best to 
locate outpatient services. That could be on a portion of the 
existing campus or it might be better situated in a new 
location not on the current campus.
    Senator Murray. Well, there is no money in your budget to 
do that, so how does that happen?
    Dr. Roswell. There is money in our budget to the extent 
that major construction money is identified for CARES-related 
construction needs.
    Senator Murray. Well, yes. Actually, we do know that you 
shift $400 million from the veterans' health care into the 
construction account. I am assuming that is what you are 
talking about.
    Dr. Roswell. In fiscal year 2004, yes, ma'am.
    Senator Murray. Well, I am deeply concerned about that 
because shifting that health care to an initiative that is 
going to close the very facilities that serve our veterans 
today really, to me, is unconscionable. I don't see how our 
veterans can feel secure when the promise to provide the health 
care that they have earned is preceded by a budget request from 
you that would not only under fund the health care account by 
moving that $400 million, but it also robs that account to pay 
for CARES projects.
    I mean, how do you reconcile this? You have to understand 
how our veterans out there are feeling. You are recommending 
closing their facilities. You are saying something is going to 
happen in the future, but there is no money in the budget to do 
it, and we are reducing the health care to build some 
facilities that we don't even know what they are.
    Dr. Roswell. Let me back up. The expectation would be that 
leaving the current campus would be if there is an enhanced use 
leasing opportunity that would generate sufficient revenues to 
cover the cost of relocating the facility.
    Senator Murray. An enhanced lease use facility that you are 
looking for somewhere else? I mean, have you ever been to 
Walla, Walla? There aren't very many facilities there.
    Dr. Roswell. I understand, and it is entirely possible 
that--again, I don't believe that there is any foregone 
conclusion, that the outpatient services would be moved off the 
current campus. It is simply an option that would be explored.
    Our goal would be, if this CARES recommendation were 
accepted by the Secretary, to provide the highest-quality 
environment of care for continued outpatient services either on 
the current campus or, if it was more conducive to delivering 
outpatient services, to a location off the current campus. But, 
again, that would be something that would have to be 
determined.
    Senator Murray. Well, I remain deeply concerned because I 
know your office makes a recommendation by the end of this 
month. Congress has 60 days to review, whatever that means; at 
this point, I am not sure. Meanwhile, we won't have identified 
for those veterans where they are going to receive the care.
    I just think we need from your office specific budgets and 
time lines and specific places where these veterans are going 
to receive their care before we end up at the end of our 60-day 
time line and we are still sitting here asking you the same 
questions we have been asking for the last several months.
    Dr. Roswell. Let me assure you that the Department will not 
take any action to close the current campus until we have fully 
identified where outpatient services would be provided, how 
they will be provided, and we would not close the current 
facility until----
    Senator Murray. But if you accept the CARES recommendation, 
it states specifically that that is going to happen. So you say 
on one hand the CARES Commission is accepted; that is what we 
are going to do. But then you say we are not going to do that 
until we have something. I am as confused as my veterans.
    Dr. Roswell. If the recommendation is accepted, as I said 
in my opening statement----
    Senator Murray. By your office.
    Dr. Roswell. By Secretary Principi.
    Senator Murray. Right.
    Dr. Roswell. But, yes, it would be implemented over a 
period of years. In no case would we close or implement any of 
the recommendations that resulted in closure of a facility 
until such time ask the facilities intended to replace that are 
in place.
    Senator Murray. And by ``facilities'' do you mean some new 
facility in Walla Walla that will be built that we haven't 
budgeted for?
    Dr. Roswell. We would either maintain an outpatient 
facility on the current campus or create a new one somewhere in 
the Walla Walla area to provide complete continuity of 
outpatient services. There will not be an interruption of 
outpatient care for veterans served by the Walla Walla 
facility.
    Senator Murray. And this is based on that we just trust 
this is going to happen, because I don't see it in the budget?
    Dr. Roswell. I understand your concern. Let me point out 
that there is already money in the 2004 appropriation set aside 
for use of CARES at the Secretary's discretion. There would be 
up to $400 million that could be reprogrammed. In addition to 
that, there is additional money requested in the 2005 budget 
that is now being considered before this Congress. The 
Secretary has made a firm commitment in addressing the CARES 
Plan that there would not be an interruption of services.
    Senator Murray. For outpatient. What about inpatient?
    Dr. Roswell. The commitment expressed by the Secretary is 
that there won't be interruption of any services.
    Senator Murray. Inpatient or outpatient?
    Dr. Roswell. That may mean that outpatient would shift to a 
contract delivery process, but we would always have a mechanism 
in place to provide that care on a contractual basis before we 
closed any facilities.
    Senator Murray. Again, let me just point out to you, Dr. 
Roswell--and I know you are working within confines and you are 
doing the best you can, but there are no other facilities in 
Walla Walla to contract out to. And that is, I think, one of 
the deep concerns many of us have about the CARES 
recommendations.
    I have taken my time. Thank you, Mr. Chairman.
    Senator Graham. Thank you, Senator Murray.
    Senator Hutchison. [Presiding] Mr. Chairman, I think the 
gavel is mine, but did you wish to go next? I would be happy to 
call on you.
    Senator Graham. Thank you very much, Madam Chairman.
    I would like to go back to this issue of long-term care, 
because we know that it is going to be an area of increasing 
demand. I think also we'll see a demand for greater 
diversification in the ways in which that care is provided, 
including long-term care within the communities to various 
forms of institutional care.
    Where is the CARES program on that issue, and what are your 
recommendations as to how the VA should deal with the demand 
for long-term care?
    Mr. Alvarez. For the first part of that question, sir, I 
think Dr. Roswell could probably answer that and I will defer 
to him on the first part.
    Dr. Roswell. Obviously, a long-term care projection model 
wasn't included in the draft National CARES Plan submitted to 
the commission because we were not comfortable with the data. 
We have been working diligently with our actuaries to refine a 
projection model. We believe we are very close to a model that 
would project the needs for long-term care.
    That will require some policy issues that the Secretary 
will want to evaluate before making final determinations, but 
that process would then be incorporated into a continuous 
strategic planning process that will continually address and 
adjust our programs to meet the long-term care needs of the 
Nation's veterans.
    Mr. Alvarez. Sir, Dr. McCormick can address the latter part 
of your question with regard to our recommendation on that.
    Mr. McCormick. Yes. In our cross-cutting issues, we were 
concerned that even though the long-term care model wasn't 
done, there were a number of specific items that actually 
addressed long-term care at specific sites.
    Two things. First of all, in our cross-cutting issues we 
made a very strong statement that we believed that no action 
should be taken on altering or changing current long-term care 
until a strategic plan is put together, and that that plan 
needed to consider the broad needs of long-term care for the 
highest-priority veterans, including those with mental 
disorders who will need long-term care as well.
    When we then came to specific issues where there was a 
recommendation about a specific nursing home, we made a 
judgment but always put a caveat in that it was subject to 
being consistent with the eventual model that would be run that 
would say what kind of beds we need to serve what veterans in 
what location.
    Senator Graham. Well, I remember this Committee and the 
full Congress adopted a directive to the VA relative to long-
term care, I believe, in 1999. It sounds as if the information 
that you are now suggesting needs to be developed is the kind 
of information which the 1999 directive precipitated.
    What has happened to that 1999 legislation and to what 
degree is it going to be involved in your development of the 
strategic plan?
    Mr. McCormick. Again, we emphasized that we felt that the 
Department needed to follow the millennium bill guidelines, 
which had to do with priorities again to have the right kind of 
nursing homes especially for the highest-priority patients. We 
also acknowledged the nursing home floor that was put into 
that.
    Again, our position was that the real issue wasn't even how 
many beds we had overall in the system, but what kinds of beds, 
where and whether, to address the needs of each specific type 
of patient who would need long-term care into the future.
    Senator Graham. Could you give the Committee a memorandum 
of what has happened since the Millennium Health Care Act--
where that Act stands and how it is going to fit into your 
planning for long-term care services and facilities?
    Mr. McCormick. I guess that would be Dr. Roswell's----
    Dr. Roswell. Yes, sir. That law requires that the VA 
maintain its 1998 long-term care patient census of 13,391 
patients. We have implemented management guidance, including a 
pro-rated quota, of that national-mandated floor on inpatient 
levels to each of the 21 VISN directors.
    Despite those management incentives, the demand for care is 
such that we are not currently at the 13,391 statutory 
requirement. We are closer to about 12,000 patients right now, 
despite our efforts to maintain that patient census within our 
facilities.
    I would note that we have significantly increased, during 
this time period, the State veteran home nursing beds 
available. In your own State of Florida, for example, a number 
of State veterans homes have opened, creating other options for 
veterans at multiple locations.
    We also have significantly increased, almost tripled, the 
non-institutional care programs that serve veterans in the 
least restrictive setting. So we are expanding a full continuum 
of services that would be reflected in the long-term care 
strategic planning model that has been referenced here.
    Senator Graham. Mr. Chairman, my time is up. I would like 
to indicate that I am going to be asking a question relative to 
the status of a new hospital that the Administration had 
indicated it supported. I am speaking about a hospital in 
Pensacola, Florida, which has already been named the Eastern 
Southern Hospital. There doesn't appear to be any provision in 
the CARES report or in the Commission's commentary relative to 
that hospital, and I would like to get an understanding of why 
there has not been such a provision made.
    Chairman Specter. Thank you, Senator Graham.
    Senator Hutchison.
    Senator Hutchison. Thank you, Mr. Chairman.
    Mr. Alvarez, early in this process our veterans 
organizations and local community leaders worked with their 
respective service network regional directors to develop plans 
to optimize their facilities, but the report bears almost no 
resemblance to the original recommendations made by the service 
network directors in the field.
    One example: the veterans integrated service network market 
plan recommended establishing Waco as a regional psychiatric 
resource. The plan spoke of an enhanced mission for Waco by 
expanding the geographic service area and working to designate 
the Waco VA hospital as a Psychiatric Center of Excellence.
    When you consider that the Veterans Administration has 
spent more than $80 million over the last 10 to 15 years 
building state-of-the-art psychiatric care facilities in Waco 
training technicians and nurses in this specialized field--and 
when we visited this facility with Secretary Principi, we 
learned that there are interns and residencies which could also 
be enhanced from the medical school at Texas A&M, very close 
by--the original recommendation to consolidate psychiatric 
services in Waco seemed to be a good use of taxpayer funds. 
However, the report completely reversed that and suggested that 
most of the services from Waco be moved to other places.
    In addition to that, your early reports estimated that it 
would cost about $16 million to move these services. Now, we 
have just spent $80 million over the decade renovating and 
upgrading the psychiatric facilities at Waco. Now, we are 
talking about $16 million to move it, and Representative 
Edwards was told by someone in the VA that the moving cost was 
more likely $42 million.
    So could you expand on how you came to the conclusion that 
moving the major parts of the psychiatric services, inpatient, 
from Waco would be prudent for the taxpayers and better service 
for the veterans?
    Mr. Alvarez. Thank you, Senator. Let me just State that the 
market plan that you referred to which called for upgrading of 
the programs at Waco was not in the draft national plan that we 
received. The plan that we received was the plan that 
transferred inpatient acute psychiatric beds from Waco to 
Temple and to the Austin area.
    Ninety-four percent of the current workload at Waco is 
outpatient care, and that is to remain there at Waco, whether 
it is a portion of the campus or in the city itself. So the 
other plans that you have mentioned really did not surface in 
the draft national plan and it was not presented to us.
    As far as a $15 million cost to transfer that, what caught 
our attention was that we were told at the hearing by the VISN 
director and staff that currently he was having to redirect 
about $15 million from other facilities in his network to 
support the operation at Waco because of the large overhead of 
that campus. So that was one thing.
    When we took a look at the cost/benefit analysis that was 
proposed for Waco that was submitted at the end of October--and 
we have questions about this--the life cycle cost savings over 
20 years would range from $200 million to $800 million. Well, 
the commission did not believe the $800 million, and probably 
the $200 million is closer to it. But that was one of the 
factors that we said take another look at that and see what the 
more realistic numbers were. So taking everything into 
consideration, our recommendation then basically went with the 
plan.
    We also put some caveats on this. You have some hard-to-
place inpatients in the nursing home that we said let's take a 
good look at those because that kind of care is usually not 
provided in the community. Dr. McCormick can probably address 
that better than I can, but the key was that that large 
overhead that was causing him to redirect money from other 
facilities to keep that operation going was a major factor.
    Senator Hutchison. You are talking about the inpatient 
psychiatric?
    Mr. Alvarez. No, the cost of the campus itself.
    Senator Hutchison. The campus itself.
    Mr. Alvarez. He would prefer to move, even if he has to 
stay on that campus, to another location there if he could get 
the money to build it, a multi-specialty outpatient clinic 
either built or leased in the community. That would save him a 
lot of money and provide up-to-date, modern care for the people 
of that community.
    Senator Hutchison. Well, let me just say, first of all, 
that the inpatient--you were saying that 80--what percentage 
did you say is outpatient care?
    Mr. Alvarez. Ninety-four percent of the workload.
    Senator Hutchison. Ninety-four percent. So you are saying 
that only 6 percent of the workload is the inpatient 
psychiatric?
    Mr. Alvarez. Yes, ma'am.
    Senator Hutchison. That just defies what we saw there in 
the inpatient facilities. I am sure you are not not telling the 
truth, but somehow we are talking apples and oranges because we 
saw inpatient facilities with 60-patient capacity that were 
pretty well full.
    Mr. Alvarez. You have 110 beds there, inpatient.
    Senator Hutchison. Yes, so it is not adding up.
    Mr. Alvarez. Would you like to expand?
    Mr. McCormick. To clarify, the 94-percent figure is that 94 
percent of the patients who get care at Waco receive only 
outpatient care, which is not unusual. There is a substantial 
inpatient workload there.
    Let me just say one thing, if I could, that you will find 
in the report that we tried to be consistent. One of the 
advantages of the proposal for Waco was to move some of the 
acute beds to Austin. There is a very large, as you know, I am 
sure, Senator, outpatient clinic in Austin that treats about 
16,000 veterans a year, about 3,000 with mental disorders.
    Right now, when one of those patients needs acute inpatient 
psychiatry, which usually means he is either suicidal or 
seriously mentally ill, he most often ends up having to go all 
the way up to Waco. One of the principles that we used was that 
in a city the size of Austin there ought to be access to acute 
inpatient psychiatric care. So one of the strengths of their 
proposal was to move some of the beds closer to where the 
veterans lived in Austin so that their families can be engaged 
in treatment.
    The second strength of that proposal was to move the 
remaining long-term and acute beds to Temple, which would put 
them more centrally in the market, but also right on the same 
campus with the medical beds. And as these patients age, there 
is a clinical advantage to having acute psychiatric and acute 
medical services in very close proximity.
    It was really the access issue, at least from my 
perspective, which caused us to approve of that plan because we 
felt it was a strength and improved access and quality of care 
for veterans in that central Texas market by putting the 
services closer to where the bulk of them live.
    Senator Hutchison. Let me just say that it seems to me that 
having the specialty doctors and nurses, the trained people, is 
going to be more cost-efficient if it is in fewer places. If 
you are going to be inpatient, the difference between traveling 
to Waco or Temple would not seem to be that big a difference, 
where you have the investment already at Waco.
    Let me just add that if the overhead cost of the campus is 
an issue, then what I am hoping is that with the added emphasis 
that the community wants to bring forward in filling the 
buildings, in taking responsibility for maintaining the 
campus--and further, in your report you recommended closing the 
Marlin facility and building a new multi-specialty outpatient 
clinic someplace in the Waco area, which would seem to be much 
more economically done on a campus that the VA already owns, 
upgrading facilities there and thereby filling the buildings 
and lowering the cost.
    So that is where I am hoping that we can add to your body 
of knowledge and make the case to Secretary Principi that we 
still can be efficient and keep the trained workforce in place.
    Chairman Specter. Senator Hutchison, you are now at double 
time, a little over 5 minutes over. I know how important the 
Waco hospital is to you, so I haven't interrupted you, and the 
witnesses may answer your question.
    Senator Hutchison. I would love to just have them answer 
this, and then there will be a second round?
    Chairman Specter. That would be a third round?
    Senator Hutchison. Could there be a third round, then?
    Chairman Specter. Yes.
    Senator Hutchison. Thank you. Well, a lot happened in 
Texas, Mr. Chairman, so I am trying to focus on this.
    Chairman Specter. I know how important this is to you and I 
haven't interrupted you. We will come back for another round.
    Senator Hutchison. OK, if they could answer this.
    Chairman Specter. The witnesses may respond to your 
question.
    Mr. Alvarez. With regard to Marlin, Marlin is already 
closed, inpatient. It is outpatient, and the draft national 
plan calls for consolidating Marlin with a Waco outpatient 
somewhere in the vicinity. We also said take a look at that 
before you do that; because of the location where you want it, 
be careful how you do that.
    Mr. McCormick. I would just say one more thing about acute 
inpatient psychiatry, Senator. When you are treating 3,000 
patients in a large metropolitan area like Austin on an 
outpatient basis, acute inpatient psychiatry is a critical part 
of the care.
    While 50 years ago we put our psychiatric hospitals way out 
in the country, right now, of course, we have them very close 
to where the patients live because the stays are shorter, the 
family needs to be involved in the care. The family needs to be 
able to not only visit, but really take a part, and we need to 
rehabilitate the patients and put them back in the community.
    The last thing I would use would be a case example. There 
are very fine mental health staff at your clinic in Austin, and 
they shared with me when I visited there the dilemma that we 
have a one hundred-percent service-connected patient with 
schizophrenia showing up in an agitated state. The ideal thing 
would be to admit him to a VA bed right there.
    This is not a small city, Austin. By taking him all the way 
to Waco, you then separate him from his family. He may have to 
wait in an agitated State for an hour for an ambulance to 
arrive and then make the ambulance ride up there. With all due 
respect, that is not good care, Senator.
    Mr. Alvarez. Finally, Senator, if I could finish up, with 
regard to the community, the community became very active and 
really worked cooperatively. Our recommendation calls for more 
time so that the VISN director can work with the community to 
see if they can come to a solution for that campus itself, see 
what else can be done there. So my understanding is that they 
are working closely with them, but we will see what develops.
    Chairman Specter. Chairman Alvarez, coming back to the 
Altoona facility which I had mentioned earlier, in 1997 the 
Altoona VA maintained 38 inpatient beds to care for 8,900 
veterans. Now, it has 28 beds, a 26-percent decrease, and 
provides care for more than twice as many patients, 23,000. Its 
average length of stay on inpatient admissions is 5.64 days, 
equal to or exceeding the standard of Medicare and the 
Pennsylvania Hospital Association.
    Altoona's intensive care unit was recently renovated and is 
a state-of-the-art facility.
    What would the justification be under these circumstances 
for eliminating the inpatient beds at Altoona, Mr. Chairman?
    Mr. Alvarez. Mr. Chairman, you are correct. Currently, they 
have 28 operating internal medicine beds. Last year's daily 
census was 19 and it has been declining, and our recommendation 
is to watch that closely.
    Now, when you talk about the number of veterans coming in, 
the far majority of those are outpatient and specialty 
programs. Again, consistent with our entire effort, we would 
like to see more care for those veterans coming for ambulatory 
care, special programs, et cetera.
    Chairman Specter. Well, where are they going to get that 
special care?
    Mr. Alvarez. Well, you are not doing any surgery now at 
Altoona now, but Dr. Roswell can probably be more detailed.
    Chairman Specter. Excuse me. Where are they going to get 
that special care if you close the Altoona inpatient beds?
    Mr. Alvarez. Well, the kind of care I am talking about is 
expansion of outpatient care, more CBOCs, bringing access to 
care to the community, and as Dr. McCormick indicated, to 
include mental health services at the CBOCs out at the 
community level, that kind of an emphasis.
    When our commission took a look at the Altoona situation, 
recognizing the dynamics of the area, all we are really saying 
is take a good, careful look at that, and when it is reasonable 
it would make sense to go ahead and shut that operation down. 
You have 11 community JCHA-approved providers within a 60-
minute radius of Altoona.
    Chairman Specter. What will the cost of that be to the VA?
    Mr. Alvarez. I don't have a figure on the cost at this 
point, but that is part of our recommendation.
    Chairman Specter. Well, wait a minute, wait a minute.
    Mr. Alvarez. Yes, sir.
    Chairman Specter. Is that important that you don't have a 
cost figure? How can you close Altoona and send them elsewhere 
if you don't have a cost figure for comparison? How can you do 
that?
    Mr. Alvarez. Our recommendation is to do the cost/benefit 
analysis, and when it is reasonable at some point, go ahead and 
make that move.
    Chairman Specter. Now, wait a minute. If you are saying do 
a cost/benefit analysis and you haven't come to a final 
conclusion about the Altoona facility----
    Mr.Alvarez. That is right.
    Chairman Specter. You can't come to a final conclusion 
about Altoona unless you do a cost/benefit analysis.
    Mr. Alvarez. That is right, sir.
    Chairman Specter. So you are not recommending the closing 
of the inpatient beds in Altoona?
    Mr. Alvarez. We are saying do that when it is reasonable at 
some point.
    Chairman Specter. But you have been charged, Mr. Chairman, 
with making a determination as to what is reasonable. That is 
your job. The people in Altoona think that you want to close 
them down. Do they have the wrong impression, because that is 
what your report says?
    Mr. Alvarez. Our report says at that point when it is 
reasonable to close inpatient services, to go ahead and do 
that.
    Chairman Specter. Well, if you are saying when it is 
reasonable, then you are frankly not saying much at all.
    Let me go on to----
    Dr. Roswell. Mr. Chairman, if I may, the draft National 
CARES Plan felt that that reasonable point would be 
approximately 10 to 12 years from now, possibly 2012 or 2014.
    Chairman Specter. Well, who knows what is going to happen 
between now and 10 to 12 years from now? Are you going to come 
back with another commission and Mr. Battaglia will be chairman 
by that time? Is that what you are going to do?
    What value does this commission report have if you are 
going to come back 10 to 12 years now and if it is not going to 
take effect until 10 to 12 years from now? You know, I am only 
going to be in the Senate for 20 more years. I might not even 
be here.
    Dr. Roswell. I think the sense of the report--certainly, my 
read of the commission's recommendation was if the inpatient 
census declined precipitously prior to 2012 or 2014, then we 
would need to reevaluate and consider closure at that time.
    Chairman Specter. And if it doesn't decline precipitously, 
then you would keep it open?
    Dr. Roswell. In my interpretation, it would not be 
feasible. The recommendation was to close those beds as soon as 
feasible. If the census is maintained at the current level or 
actually increases, then in my opinion, strictly in my personal 
opinion, it would not be feasible.
    Chairman Specter. Dr. Roswell, you don't have a personal 
opinion. You are a ranking official at the VA. You speak for 
the VA and I like what I have heard.
    Senator Rockefeller, there is another vote on, so I am 
going to excuse myself for a while.
    Senator Rockefeller. Good. I can be Chairman again?
    [Laughter.]
    Chairman Specter. Acting Chairman.
    Senator Rockefeller. Dr. Alvarez, let me go at this maybe a 
little different way. What you do is you go down and you have 
your principles of how it will affect access and costs and 
alternatives in the community and the rest of it. You had a lot 
of places to visit, or your people did. I mean, I don't know 
how you did it.
    There are two ways to visit a community, it seems to me. 
One is that you do it the way any President does, so to speak, 
Republican or Democrat; in other words, what I call rope line. 
You go in, you see a cross-cut of veterans and you see the 
administrators, you talk to a couple of people and you are out 
of there, not because you want to be, but because you have to 
be.
    Then there is another way, which is what I want to talk 
about, with the indulgence of the Chairman, which relates 
specifically, in fact, to the VA hospital in Beckley. I 
mentioned before that about 4 percent of the land is flat. In 
southern West Virginia, probably it is about 2 percent. Let me 
phrase it this way. If I were to ask what this means that 
people would have to go to Richmond or Salem, your answer might 
be yes, and then your presumption might be, well, they could do 
that.
    Southern West Virginia is one of the poorest places in the 
country. The county right next to it, Raleigh County, is one of 
the four poorest counties in the country. Every time I am in 
West Virginia, I always try to meet with the families of Iraq 
reserve, regular and guard. The idea is that what I am trying 
to do is get a statewide organization so that they can develop 
things like we have to pay for our meals even when we come home 
and a lot of different factors, or just timing.
    I was in Mercer County, which is actually south of 
Richmond, but which is in West Virginia, and I was suggesting 
to them, why don't you get together with the people in Raleigh 
County and form a unit. I am trying to do this on a statewide 
basis. They said to me, well, we can't go to Raleigh County; it 
is much too far to drive.
    Now, I am not judging them, but that was their view. I can 
either say I can change their behavior by pointing out that it 
is an hour-and-three-quarters up the interstate, something like 
that, once you get to the interstate, or I can accept the fact 
that if that is their mindset--and remember how they came; they 
were the people who basically left Virginia because Virginia 
didn't want us, and they were the ones who went into the 
southern mountains, which is where they are with their long 
rifles, and sort of said ``don't tread on me.'' They have had 
that mindset ever since, and they did toward me when I came to 
West Virginia from some strange State in the northern part of 
this Northeast. They were very suspicious for a very long time. 
They don't change their ways as fast as other people do who are 
in a much more mobile psychological and economic economy. So 
the fact is they probably won't go to other places.
    You have a copy of the West Virginia Hospital Association. 
I went and I talked with those hospital directors, including 
the ones in Beckley, where they have the beds--see, it is 
deceptive--but they don't have the doctors or the nurses to 
staff the beds. So what appears to be a possible turns out to 
be an impossible because of the nature of southern West 
Virginia, where it is harder to live; it is just harder to 
live, lots of things.
    It turns out, in fact, that if you do go to another place, 
it does cost more. And what does it save the Veterans 
Administration? $3.4 million, if you stay at Beckley. So you 
can say, well, that is not much of a case, Jay; we have got 
billions of dollars. I would say, no, it is a case because it 
is a cost/benefit thing.
    So you combine the unwillingness or the inability--it is 
not unwillingness; it is sort of that people don't travel; they 
won't travel--with a lack of transportation to the hospital 
infrastructure, in spite of the work that the DAV and VSOs and 
the VA does, and they don't have that sufficiently. And you add 
on the vet centers and that still doesn't do it because you are 
talking about more serious work, and the 550 jobs at the 
hospital.
    I just put that before you that when you are looking at you 
are looking at your five principles, sometimes what sticks out 
at you is not the condition in which people decide whether or 
not to get health care. And I know lots of people, going back 
to my VISTA days in West Virginia in the early 1960's, would 
rather not go to a medical facility and find out more bad news. 
So they don't go, which is not your purpose.
    Thank you, sir.
    Chairman Specter. Thank you very much, Senator Rockefeller.
    Senator Graham, you have not had a second round yet.
    Senator Graham. Thank you, Mr. Chairman. I would just like 
to return to the subject I broached earlier, and that is the 
area of a very major and growing concentration of veterans: the 
panhandle of Florida.
    There seems to be Administration support for a new hospital 
in Pensacola. I wonder if someone could give a status report on 
that and allay my concerns that there didn't seem to be any 
reference to that in either the CARES report or in the 
Commission's review.
    Dr. Roswell. Are you speaking to the Pensacola Naval 
Hospital which would have a joint presence with the VA?
    Senator Graham. Yes.
    Dr. Roswell. We are working closely with the Navy and 
currently have a very productive sharing agreement with the 
Pensacola naval facility. The expectation is that the new 
facility would have a VA sharing presence. What form that will 
take--it would be premature to describe that in detail at this 
point, but we will be happy to provide some follow-up 
information.
    Senator Graham. I am familiar with the hospital in 
Albuquerque, which is a shared VA-Air Force hospital. Is that 
essentially what you are----
    Dr. Roswell. The concept could take the shape of the one in 
Albuquerque. We have actually just completed with DoD--in fact, 
I was briefed this morning following the 2002 Defense 
Authorization Act which requires an evaluation by an 
independent contractor of joint governance. One of the areas 
looked at was the Gulf Coast area. We now have a planning model 
that looks at both VA and DoD workload and how that is managed.
    So it could be an integrated facility. It could be on a 
contractor basis where VA would reimburse Navy for that care. 
It could be a joint facility. Those types of decisions would 
come with further planning which is scheduled.
    Senator Graham. Would you anticipate that this issue, as 
well as planning for long-term care, would be incorporated in 
the final CARES report?
    Dr. Roswell. I don't think it would, sir. I think that 
these are decisions that would be in the implementation 
planning and the continuous strategic planning process. Because 
it is not specifically addressed as a proposal in the draft 
National CARES plan which the commission used to formulate and 
frame their recommendations to the Secretary, I would 
anticipate a specific recommendation.
    But I can assure you that there is active sharing at the 
Pensacola facility. There is a very productive relationship and 
it is something that the Joint Executive Council between VA and 
DoD, as well as the Health Executive Council, is monitoring on 
a continuous basis.
    Senator Graham. What was the criteria to determine which 
programs were officially and formally part of the CARES process 
and which were not?
    Dr. Roswell. The CARES process utilized a variety of 
criteria, but basically there was a planning model. If there 
were significantly gaps, it basically used an actuary to 
project the veteran population and the demand for care in the 
years 2012 to 2022. It then overlaid that demand for care with 
the current infrastructure within VA and the capacity 
associated with that infrastructure. If there was a gap of more 
than 25 percent, either 25 percent excess capacity or 25 
percent insufficient capacity, then it had to be addressed 
specifically in the planning model.
    In the case of Pensacola, most of that care, as you may 
know, is provided through the Gulfport-Biloxi VA Medical 
Center, which is responsible for the current VA Pensacola 
outpatient clinic and is also the oversight or the parent 
facility for the sharing situation with the Pensacola naval 
hospital. I can't tell you with certainty, but my expectation 
is because there was not a 25-percent gap in that parent 
facility, it didn't fall out as a separate planning initiative.
    Senator Graham. Just briefly, with 45 seconds left, would 
the same rationale have applied to the long-term care issue?
    Dr. Roswell. No, sir. The long-term care wasn't even 
included in the model because, working with our actuary, we 
couldn't adequately project it at that time.
    Senator Graham. But do you think that it will be 
incorporated in the final CARES report?
    Dr. Roswell. Long-term care will not be incorporated as far 
as specific recommendations, but the strategic planning process 
will address that on an ongoing basis.
    Senator Graham. And what is the time line of CARES and the 
strategic planning model?
    Dr. Roswell. The Secretary is expected to make this final 
decision with the CARES plan on or about March 12, at which 
point in time we would go into an implementation plan. That 
would also commence a strategic planning process which should 
be a continuous strategic planning process that we will 
validate and update on a year-to-year basis.
    Chairman Specter. Senator Graham, I would like to go back 
to the time limits so we can move along. We had deviated with 
Senator Hutchison, who made no opening statement and had a very 
important issue. But we are going to try to stay within the 
confines of the time limits.
    Senator Hutchison.
    Senator Hutchison. Thank you, Mr. Chairman.
    I want to go back to where we left with regard to the 
recommendation that there be a new multi-specialty outpatient 
clinic constructed in the Waco area and ask if you did consider 
renovating the existing space already owned by the VA and if 
that would be an alternative that would save taxpayer dollars, 
while staying in the same area for service.
    Mr. Alvarez. Senator, we asked that question and the 
general consensus, without any specific detail, was that it 
would be far more expensive. Let's put it this way: it would be 
far less expensive to go ahead and build a new, modern, up-to-
date multi-specialty outpatient clinic there either on the 
campus or off the campus somewhere to serve those veterans than 
to try to renovate those buildings.
    That facility was built in 1932. It is 1932-era 
construction. Everything is interconnected with all the 
building, all the heating, electrical. It is a nightmare of a 
problem, and so I don't believe they went further into it. I 
guess that basically was the extent of our probing.
    Senator Hutchison. Did you base it on any figures that 
would be given in the cost of renovation, particularly if there 
were other buildings filled that would take away some of the 
operational inefficiencies?
    Mr. Alvarez. No, Senator, but we do know that that is one 
of the factors that the city task force was going to look into 
and work with the VISN director on that.
    Senator Hutchison. So in your mind, would it be an open 
issue whether renovation could be done on a more cost-efficient 
basis than building a new facility?
    Dr. Roswell. If I may, Senator, generally speaking, 
renovating 50-year-old buildings, because of the issues 
Chairman Alvarez brought up, is more costly than new 
construction. I think a better way to frame the question would 
be that new construction would take place on the current Waco 
campus or off-campus.
    Senator Hutchison. Exactly. I was just going to say the 
next step is, then, are you talking about buying real estate 
when you are looking at the----
    Dr. Roswell. Not necessarily. The Waco campus is costly to 
operate because of its size. There are over 100 acres. There 
are numerous buildings and that is where the excess cost of 
operation comes in. If we found a sharing partner that would 
want to manage the entirety of that campus, then it probably 
would be more cost-efficient to move off campus with new 
construction.
    For example, if our regional office wanted to come in and 
relocate their offices there, which is a very large office in a 
Federal building in downtown Waco, then it might be more costly 
to build a new outpatient clinic on the existing acreage that 
VA currently owns.
    Senator Hutchison. Cost-efficient, you mean?
    Dr. Roswell. Cost-efficient.
    Senator Hutchison. Yes. I am looking for areas where there 
might be, with the community input, some way to go.
    Let me just talk again about the blind rehabilitation 
center. When we were there, they had just done about a $10 
million renovation, a state-of-the-art facility. And now the 
recommendation was to move that away, again, taking away 
another service that is done that would create synergy, moving 
it possibly to Dallas or Temple, or they were even talking 
about Mississippi.
    That didn't make sense on its face, particularly with 
Temple being 30 minutes away and having the ability to have 
medical students in Waco just about as easily as you have them 
in Temple.
    Mr. Alvarez. Can I answer that?
    Senator Hutchison. Yes.
    Mr. Alvarez. In keeping with the total plan to move all the 
programs off that campus, the proposal with regard to the blind 
center was discussed at the hearing and the VISN directors 
really did not want to consider Dallas, as it was farther away 
for a lot of the veterans.
    His objective would be to move it closer to where the 
majority of the veterans live, possibly the Austin area, 
because they do serve a lot of people from the lower Rio Grande 
Valley and it would be closer to them, also.
    Senator Hutchison. Again, if you were going to try to 
create a synergy of efficient service on that campus, keeping 
that there, having your new multi-service outpatient facility, 
you could work something if you were trying to do that.
    Dr. Roswell. It is possible. Let me point out that the 
synergy with blind rehabilitation----
    Chairman Specter. Dr. Roswell, the time is expired, but you 
may finish your answer.
    Dr. Roswell. The synergy with blind rehabilitation has to 
do with access to optometrists, to ophthalmologists, to 
psychologists, a variety of specialties that may be located in 
a more full-service acute care facility such as the one in 
Temple.
    If the University of Texas medical branch at Galveston were 
to create a significant new medical school presence in the 
Austin area, that would probably create an ideal site for a 
blind rehabilitation center, as well as some of the acute and 
long-term psychiatric facilities that Dr. McCormick spoke of.
    Chairman Specter. Thank you very much. We will have a third 
round.
    Will one more round be sufficient for your purposes, 
Senator?
    Senator Graham. I waive an additional round.
    Chairman Specter. Senator Hutchison, will a third round be 
sufficient?
    Senator Hutchison. Yes, I think so. I have so many areas to 
cover, Senator.
    Chairman Specter. Well, we can always submit questions for 
the record, if you have them.
    Senator Hutchison. Thank you.
    Chairman Specter. Chairman Alvarez, coming down to Butler, 
in 1997 the Butler VA facility had 28 inpatient beds to care 
for 10,000 veterans. Today, it has 8 beds and it cares for 
18,000 veterans. Butler does not have any unused buildings on 
the campus. Some of them have been aggressively disposed of by 
way of leases to the United Way-Butler County and Catholic 
Charities.
    Is the commission's action with respect to Butler the same 
as it is with respect to Altoona, and that is a recommendation, 
in effect, to see what happens over a protracted period of 
time?
    Mr. Alvarez. No, sir. I will let Commissioner Vogel address 
that.
    Mr. Vogel. Thank you, Chairman Alvarez.
    Senator Specter, at Butler their average daily census right 
now is between 3\1/2\ and 4 patients a day in acute medicine. 
About 96 percent of the patients there receive outpatient care 
only. As you know, in western Pennsylvania they are about 38 
miles from Pittsburgh. They do have contractual relationships 
in place now.
    Chairman Specter. Have you traveled that road, Route 8, 
from Butler to Pittsburgh?
    Mr. Vogel. I certainly have. I am from western 
Pennsylvania, sir.
    Chairman Specter. You are from where?
    Mr. Vogel. I am from western Pennsylvania.
    Chairman Specter. Are you from Butler?
    Mr. Vogel. Part of my family is in Butler, sir.
    Chairman Specter. Where is your home, Commissioner Vogel?
    Mr. Vogel. My home now? Charleston, South Carolina.
    Chairman Specter. When did you last travel Route 8 from 
Butler to Pittsburgh?
    Mr. Vogel. Last summer, when we visited there.
    Chairman Specter. How long did it take you?
    Mr. Vogel. It took us about 55 minutes, 60 minutes.
    Chairman Specter. Were you speeding?
    [Laughter.]
    Mr.Vogel. No. We were driven by Butler VA Medical Center 
police officers, who were very assiduous to the----
    Chairman Specter. I am going to fire my driver. I have 
never made it in 55 minutes.
    Mr. Vogel. Well, the point was that Butler Memorial 
Hospital, in part, has arrangements now with VA to take care of 
emergency patients and some others. Our proposal was predicated 
on the opportunity to maintain the long-term care facilities 
there, the domiciliary, the nursing home. They are busy 
facilities. They did about 165,000 outpatient stops last year. 
So no question, it is a busy facility.
    Chairman Specter. Mr. Vogel, are you aware that Butler has 
plans to allow the Butler Memorial Hospital to relocate at the 
VA?
    Mr. Vogel. Yes, sir.
    Chairman Specter. Wouldn't that change your view as to what 
ought to happen with the VA?
    Mr. Vogel. I think the view of that would be that they have 
a great opportunity for enhanced use arrangements with Butler 
Memorial Hospital, and if that is achieved, they could receive 
some real economies of scale by sharing and purchasing services 
together--dietetic service, engineering service, lab, pharmacy. 
I think we saw that as a very viable opportunity, and the CEO 
of Butler Memorial Hospital met with us both on a site visit 
and at the hearing.
    Chairman Specter. Well, at a minimum, shouldn't the VA be 
able to stay in Butler at least until they complete their 
negotiations with Butler Memorial Hospital?
    Mr. Vogel. Yes, Mr. Chairman. Throughout, our caveat has 
been the VA ought not to do anything that would reduce access 
until all things are positioned and in place through referrals 
and VA contracts with community providers and other 
arrangements to care for those veterans.
    We really spent a great deal of effort and time on the 
``E'' part of CARES, the enhanced service part of it, and 
believe with the recommendations we have made we can achieve 
those things.
    Chairman Specter. With respect to the recommendations made 
as to Erie, Chairman Alvarez, are they the same as the 
recommendations made as to Altoona?
    Mr. Alvarez. Yes, they are, Senator.
    Chairman Specter. They are the same for Altoona, so that 
you want to wait and see what happens over a prolonged period 
of time, until 2012 or 2014?
    Mr. Alvarez. Yes, sir. And besides that, there is something 
happening in that area, also. The VA is opening new CBOCs in 
that northwestern corner, and one of the factors that we 
cautioned or recommended that they do is keep track of what is 
happening with regard to those new CBOCs with respect to 
referrals from the CBOCs to Erie. The referral pattern may 
change the demand on that, in addition to the projected 
workload demand. So all of that is cautionary.
    But you are right; it is keep an eye on what is happening. 
Of course, we basically said, you know, when feasible, when 
reasonable, when you see the patient enrollment population 
declining quite a bit, then go ahead and make your decision. 
But beyond that, we didn't micromanage it. We said that is the 
decision by the VA's management. They are fully capable and we 
respect that.
    Chairman Specter. So it might take as long as 2012 or 2014, 
as Dr. Roswell testified to?
    Mr. Alvarez. Or perhaps longer if the conditions change.
    Chairman Specter. We may have another hearing, then, 
sometime around that period of time.
    Senator Hutchison.
    Senator Hutchison. I want to go to Big Spring. You 
recommended doing the feasibility study to determine what 
should be done with Big Spring, but you have got a situation 
here where Big Spring is 40 miles from Midland, 60 miles from 
Odessa, 57 miles from San Angelo, and 100 miles from Abilene. 
If you closed that facility, the closest place that those 
people in west Texas would have--and all of those are fairly 
large communities--would be San Antonio or Dallas.
    So my question is wouldn't it make more sense to work with 
the Scenic Mountain Medical Center, which is a good, solid 
medical center in Big Spring, and create a public-private 
partnership that would give a service to the west Texas 
veterans community in a more efficient way? Just leave the 
status quo on the acute care, but keep the hospital for all of 
those surrounding communities--is that a feasible suggestion? 
We have done a lot of studies on this already.
    Mr. Alvarez or Dr. Roswell, either of you.
    Dr. Roswell. Certainly, my understanding of the 
commission's recommendation and our expectation is that we need 
to study exactly where best to situate inpatient services for 
veterans in the west Texas area.
    Thanks to your office, I have become keenly aware of the 
referral patterns from San Angelo and Abilene and the fact that 
the Big Spring location, while not a populace area, per se, is 
centrally located between the entire patient population that is 
served by that medical center.
    I can readily grasp some of the disadvantages of moving 
such a facility to the Midland-Odessa, and I think a study 
would need to look not only at the utilization of services, but 
clearly the referral patterns in siting that. One of the things 
that we would be very interested in is identifying in any 
location, but particularly where we have a relatively low 
workload, a sharing partner where we could generate 
efficiencies by collaboration or sharing.
    Senator Hutchison. Like the private clinic.
    Dr. Roswell. Exactly, just as you have mentioned, yes, very 
much so.
    Mr. McCormick. I happen to have been at the hearing that 
dealt with Big Spring, and I think if you read the report 
hopefully it would reflect that we heard a lot of very 
compelling testimony actually about the centrality of Big 
Spring, very similar to what you said, both from the State 
veterans director as well as some of the veterans service 
organizations, and the reality that the other advantage of the 
Big Spring location is that there is a relatively new, I 
believe, State veterans home there that was put there, 
according to the State director of veterans affairs, 
specifically because of the hospital.
    So while we concurred with the study, I think if you read 
the report, we also tried to make it very clear that we thought 
that study had to take very much into account the knowledge 
base of the people on the ground that are there. Most of the 
testimony we heard was in favor of the Big Spring location.
    Senator Hutchison. Even the Midland-Odessa leadership, I 
think, agrees on that. Well, I thank you for putting that in 
the record because that is helpful.
    In summary, on Waco, I think we have a lot of different 
issues with regard to Waco. But if we said that the VA has a 
large investment there in both facilities and real estate and 
we were going to try to make the best use of it and that we 
could look at the new multi-service facility, whether it is a 
new building or renovating the old buildings--and I am not 
convinced that we have enough data on that yet, but say it is 
probably more feasible to build it on that campus rather than 
buy new real estate and that you could make it more efficient 
by moving other things in there, which the community is 
certainly willing to work to do, as well, perhaps even medical 
servicing-type facilities.
    The one thing that we didn't talk about too much was adding 
a nursing home-elder care facility, which I think you had 
mentioned. Is that something that could be added to? And, 
second, is that something that the older buildings are more 
amenable to as a use than maybe some of the other inpatient-
type care needs?
    Mr. McCormick. Let me just take a shot at it. First of all, 
let me start off by saying we have not only an investment in 
real estate in Waco, we have an investment in a community of 
seriously mentally ill patients.
    One of the realities is when we built places like Waco or 
Chillicothe and other places, we ended up deinstitutionalizing 
a lot of patients into the communities, often into foster care. 
And we may have 3, 400 patients right now in Waco, for example, 
and these are generally very high-priority patients.
    While I still stand by what I said for acute care, because 
Austin has that need, I think there are many opportunities----
    Senator Hutchison. Wait. I understand your point on Austin 
and not having to wait for ambulance. I understand that.
    Mr. McCormick. Right. Let me go back to Waco. I think that 
the reality goes to your point that given the community of 
seriously mentally ill patients around there--and they will age 
and they will require as they age--and the good news is they 
are living longer because of the medical care and the types of 
medications we use. They will need long-term care and they have 
to be addressed and those needs have to be addressed.
    That is one of the reasons we put the caveat in about Waco 
that the issues of long-term care for the Waco population--
frankly, the patients they are treating at Waco right now in 
long-term care are very needy patients, with a wonderful staff 
taking care of them.
    So to answer your question, I think there is clearly a need 
for a very large outpatient presence, and larger than perhaps 
you would usually have in that size of an area because of the 
community of deinstitutionalized patients. And there is an 
opportunity to look at how best to provide long-term care, and 
I think both of those things do reflect on the future planning 
for Waco.
    Chairman Specter. Thank you very much.
    Senator Hutchison. Can I just----
    Chairman Specter. Do you have another question? We have 
another panel, Senator.
    Senator Hutchison. I am sorry. I just wanted to clarify 
that last answer. I am sorry, Senator Specter. I did not know 
that we were going on.
    When you say large outpatient need, you are talking about 
the multi-service, not just psychiatric, correct?
    Mr. McCormick. Yes. I mean, you have both----
    Chairman Specter. We are over time, Mr. McCormick, but you 
may answer that question.
    Mr. McCormick. Yes. I was saying that in addition to a size 
that would fit the population for the medical needs, the 
reality is that because of the special needs of the seriously 
mentally ill, the outpatient services are already more 
comprehensive for outpatient mental health and they need to be 
sized with that in mind. So I am really saying both medical and 
mental illness.
    Senator Hutchison. Thank you, Mr. Chairman.
    Chairman Specter. Thank you very much, Senator Hutchison.
    Well, that concludes this panel. I think it has been very 
informative. As I said last September, if the proposed actions 
are justified by evidence of wastefulness developed through an 
objective analysis of individual data relevant to the 
particular VA facilities, this Committee would not object. But 
we have many questions raised and I am somewhat relieved to 
hear that you are not thinking about actions to Erie or Altoona 
for a protracted period of time, 2012 or 2014.
    I am also concerned that we not take a look at facilities 
just because they are small and they are presumptively 
inefficient. An article in the Journal of the American Medical 
Association in its January 14 issue of this year came to the 
rescue of small facilities. It concluded that small is not, per 
se, inefficient.
    So thank you very much, gentlemen. We will consider your 
testimony very carefully.
    We are going to take a very brief recess and then resume 
with panel two. So we will set up panel two and we will 
proceed, as I say, in a few minutes.
    [Recess.]
    Chairman Specter. We will proceed directly to hear from Ms. 
Cathleen Wiblemo, Deputy Director of Health Care for the 
American Legion. Thank you for joining us and the floor is 
yours. I regret the limitation of time to 3 minutes, but I 
think you are used to it. Thank you.

  STATEMENT OF CATHLEEN C. WIBLEMO, DEPUTY DIRECTOR OF HEALTH 
   CARE, VETERANS AFFAIRS AND REHABILITATION COMMISSION, THE 
                        AMERICAN LEGION

    Ms. Wiblemo. Thank you, Mr. Chairman, for the opportunity 
to express the views of the American Legion regarding the 
Capital Asset Realignment for Enhanced Services Commission's 
recommendations. The American Legion commends the distinguished 
members of the CARES Commission for their honest effort in 
analyzing the draft National CARES Plan and assembling the 
recommendations contained in the report.
    The CARES Commission did not shy away from stakeholder 
input and actively engaged the stakeholder community. The 
American Legion believes this made a significant difference in 
some of the recommendations offered by the commission.
    Campus realignments were introduced late into the process. 
These last-minute changes led to a multitude of proposals that 
were indefinite and contained contingency language that left 
the status of the services in question. The proposals to shut 
down facilities were not part of many of the VISN market plans. 
The American Legion does not believe decisions of this 
magnitude should be made absent the inclusion of long-term 
care, mental health and domiciliary projections. Further, no 
facilities should be closed, disposed of or downsized until the 
proposed transfer of services is complete and veterans are 
being treated in new locations.
    Finally, the commission recommended that no services should 
be altered until viable services are identified in the 
community. The American Legion is in agreement with these 
recommendations and hopes that stakeholder concerns will be at 
the center of these initiatives. The VA must establish quality 
criteria for contracting and monitoring of service delivery and 
training of staff to negotiate cost-effective contracts.
    The American Legion is fully committed to working with this 
Committee to ensure that the recommendations resulting from the 
CARES initiative do indeed result in enhanced services for all 
of American's veterans and their families.
    Thank you. I would be happy to take any questions.
    [The prepared statement of Ms. Wiblemo follows.]

 Prepared Statement of Cathleen C. Wiblemo, Deputy Director of Health 
  Care, Veterans Affairs and Rehabilitation Commission, The American 
                                 Legion
    Mr. Chairman and Members of the Committee: Thank you for this 
opportunity to express the views of the 2.8 million members of The 
American Legion regarding the Capital Asset Realignment for Enhanced 
Services (CARES) Commission's Report to the Department of Veterans 
Affairs' (VA) Secretary. The CARES initiative is unprecedented when 
considering the broad scope of VA's mission and the effects the final 
recommendations will ultimately have on VA's ability to fulfill its 
missions. Implementation of these recommendations will greatly impact 
services provided, not only to veterans currently seeking timely access 
to quality health care, but those active-duty military members, serving 
in more than 130 countries worldwide, who will 1 day turn to VA for 
care.
    The United States military is currently preparing for the largest 
troop rotation since World War II; therefore, it is imperative that the 
final recommendations of the CARES report lead to substantive changes 
for enhanced veterans' services rather than simply downsizing the VA 
health care system. The recommendations contained in this report will 
ultimately shape the future of health care delivery within VA. The 
implementation and integration of those recommendations into the 
strategic planning cycle over the next 20 years is crucial to ensuring 
America's veterans, present and future, receive timely access to the 
quality of health care they have earned through honorable military 
service to this country.
 the cares commission review and recommendations on the draft national 
                               cares plan
    After several months of open meetings, lengthy debates on the 
overall effect of possible recommendations and nationwide VISN specific 
hearings, the CARES Commission Report to the Secretary of Veterans 
Affairs was finally released in February 2004.
    The American Legion is concerned with contingency language 
contained in the report that does not clarify certain proposed 
recommendations. Those recommendations that include ``proposed 
feasibility studies'' and language such as ``transfer or contract 
inpatient surgery beds'' must not be open to loose interpretation. The 
American Legion supports strong oversight of all the recommendations 
well into the implementation stages.
    The American Legion applauds the distinguished members of the CARES 
Commission for their honest effort in analyzing this vast amount of 
information and assembling recommendations for a report of this 
magnitude.
    Stakeholder Involvement--One of the biggest issues of concern 
during the first phase of CARES was the obvious lack of consideration 
by VA over stakeholder input. When CARES entered Phase II, it was 
important to The American Legion to ensure that the voice of the 
stakeholder was heard during the CARES process. The American Legion 
took the following measures:
     Appointed a Legionnaire in each Veterans Integrated 
Services Network (VISN) to serve as its CARES representative with the 
primary task of participating at the local level regarding the CARES 
initiative and passing along information pertaining to CARES.
     Appointed members to The American Legion's VA Facility 
Advisory Committee to the Veterans Affairs and Rehabilitation 
Commission of The American Legion (VAFACC). The purpose of this 
Committee was to review the market plans submitted by the VISN 
leadership and to monitor the progress of the CARES process.
     Members of The American Legion's A System Worth Saving 
Task Force visited the seven facilities targeted for closure between 
November 1, 2003 and January 1, 2004. As a result of those visits, A 
System Worth Saving: The American Legion Report on the Seven Facilities 
Targeted for Closure in the CARES Draft National Plan was released on 
January 26, 2004.
    Through the hearing process and along with Internet communications, 
the CARES Commission was able to solicit stakeholder concerns, and 
actively sought their views. The American Legion has maintained that 
stakeholder input is imperative and must be taken seriously at all 
levels of the CARES process. The American Legion intends on maintaining 
its participation in this process as both a partner and stakeholder in 
developing the future of VA health care.
    Campus Realignments and Consolidations--The Draft National CARES 
Plan (DNCP) contained proposals to close seven VA Medical Center 
campuses and consolidate certain services. These proposals were 
introduced relatively late in the process, absent stakeholder input. 
The Commission's recommendations in the report to the Secretary differ 
slightly with the DNCP, and to the Commission's credit, stakeholder 
input was sought out at both the local and national level to assist 
them in their evaluation of the DNCP's proposals concerning the 
facilities.
    The American Legion cannot support the closing of any VA facility 
and denying veterans access to health care simply for the sake of cost-
saving measures. No facilities should be closed, disposed of, or 
downsized until the proposed transfer of services is complete and 
veterans are being treated in the new locations.
              canandaigua veterans affairs medical center
    The American Legion disagreed with the recommendation to close the 
Canandaigua VAMC as proposed in the DNCP. Current services include 
long-term care, nursing home care, mental health care and alcohol/drug 
rehabilitation, respite care, the post-traumatic stress disorder 
clinic, the domiciliary program and the mental health intensive case 
management program. This facility performs an important role in its 
region and is critical in meeting the health care needs of the local 
veterans' community it serves.
    The American Legion is relieved to see that the Commission did not 
concur with the DNCP plan to close Canandaigua VAMC. The Commission 
recommends that psychiatric long-term care, nursing home care, 
domiciliary and outpatient treatment remain at Canandaigua. The 
American Legion opposes any change to services at Canandaigua until 
accurate demand projections are accomplished. Further, we are pleased 
to see the recommendation by the Commission that the VISN involve 
stakeholders and the community to help resolve the challenges they are 
facing.
               livermore veterans affairs medical center
    The American Legion could not support this proposal as presented in 
the DNCP. The Menlo Park Division is 40 miles and an hours driving time 
for many of the older veterans who receive their care in Livermore. The 
proposal to contract out nursing home care in this area is far from 
realistic considering the local community does not have the capacity to 
handle these patients. The Commission recommends retaining long-term 
care services (nursing home beds) at Livermore as a freestanding NHCU. 
The American Legion agrees.
                  waco veterans affairs medical center
    The American Legion disagreed with the DNCP proposal to eliminate 
health care services at Waco VAMC. The Commission recommends retaining 
the NHCU as a VA operated facility, transfer of inpatient psychiatry, 
blind rehabilitation and PTSD residential rehabilitation to Austin and 
Temple and the construction of a new multi-specialty CBOC in Waco.
    Waco is a multi-VISN referral facility for chronically mentally ill 
patients and a national referral facility for blind rehabilitation. 
Again, the CARES model does not incorporate the mental health needs and 
projections to 2012 and 2022 for veterans. Until the mental health 
numbers have been included, The American Legion believes the facility 
should stay open with no change to its mission considered.
        va pittsburgh healthcare system, highland drive division
    The proposed closing of Highland Drive and the transfer of all 
services to University Drive and Aspinwall campuses would require 
considerable and costly construction with estimates of more than $90 
million. Due largely to the very distinct veterans' population Highland 
Drive VAMC serves, any transition of services could prove detrimental 
to the veterans' population relying on the services provided. Any 
proposed transfer of services must be seamless with as little 
disruption as possible to these veterans. If any proposed transition of 
services were to take place, The American Legion insists that an 
adequate amount of time be given to allow an orderly transfer with 
minimal disruption to patients and families.
                leestown veterans affairs medical center
    The American Legion objected to the DNCP proposal to close the 
Leestown Campus of the Lexington VA Medical Center. Veterans in this 
area are woefully underserved in the mental health care area. The 
closing of the Leestown campus would be a great disservice to veterans 
in need of mental health services. Once again, The American Legion 
points to the lack of accurate mental health care projections 
throughout the VA system. Even if VA does include projections for 
future mental health care, those figures will not be incorporated until 
the next strategic planning cycle. The American Legion agrees with the 
Commission recommendation to keep the Leestown VAMC open.
              brecksville veterans affairs medical center
    The Commission concurred with the DNCP proposal to close this 
facility and transfer all services to Wade Park. This raises serious 
concerns that Wade Park cannot handle the influx of new patients and 
that many patients will have to forgo treatment. The American Legion is 
concerned that this facility will close before proper planning and 
transferring of services has taken place. The chance for disruption of 
services to veterans is considerable. If the Brecksville VAMC is 
closed, VA must ensure that facilities at Wade Park are sufficient and 
operational before any services are discontinued.
                gulfport veterans affairs medical center
    The American Legion does not support the closing of the Gulfport 
VAMC as proposed in the DNCP and concurred with by The Commission. 
Under the plan, all services are to be transferred to Biloxi and 
Keesler AFB. The American Legion believes the plan relies too heavily 
upon future developments with no guarantee that they will come to 
fruition. Biloxi's capacity to handle Gulfport's patient load before 
2009 is questionable. Additionally, the Department of Defense (DoD) has 
made no firm commitment regarding the number of beds they can or will 
provide at Keesler AFB. Furthermore, gaining access to the base may be 
restricted because of increased homeland security measures.
    Community-Based Outpatient Clinics--The VISN market plans proposed 
the establishment of 242 new Community Based Outpatient Clinics 
(CBOCs). To maintain the integrity of the system, and maintain level 
growth for demand of services and ensure the ability to provide quality 
care, the DNCP proposed the establishment of only 48 CBOCs prioritized 
into three groups.
    The criteria for inclusion into the top 48 CBOCs: (1) an access 
gap; (2) projected future increases in workload; and (3) more than 
7,000 projected enrollees currently residing outside of access 
standards per proposed CBOC.
    On October 7, 2003, VA's Undersecretary of Health informed the 
Commission that priority groups for CBOCs were established in order to 
continue limiting any new enrollees to prevent any strain on the 
inpatient infrastructure. The Commission noted that this has the effect 
of limiting access to outpatient care and is contrary to the goals of 
CARES to better serve veterans today and in the future.
    The American Legion agrees with the Commission's recommendation 
that new CBOCs be established without regard to the three priority 
groups outlined in the DNCP. The American Legion believes funding for 
construction of new CBOCs should come from additional discretionary 
construction appropriations. Currently, VISNs and facilities struggle 
to maintain timely access to quality health care for veterans, 
especially when inadequate annual VA medical care appropriations are 
consistently finalized well into the new fiscal year. In the fiscal 
year 04 VA medical care budget, Congress will allow the transfer of 
$400 million for CARES recommendations. The American Legion disagrees 
with this budgetary practice. For several years, VA Construction, both 
major and minor, was under funded pending the approval of CARES 
recommendations. This ``robbing Peter to pay Paul'' approach is 
inappropriate budgetary shenanigans. CARES' ``enhanced services'' 
construction funding should fall under VA Construction.
    Long-Term Care, Mental Health, Domiciliary--VA provides specialized 
and unique care to veterans. It has been shown that the veterans' 
population cannot accurately or fairly be compared to the general 
patient population. The VA patient community is an older population 
that experiences a myriad of co-morbidity issues that complicate 
treatment.
    CARES is a data driven process. The key component is the data used 
to forecast the future needs of veterans. The CARES process fails to 
include information on long-term care, outpatient mental health and 
domiciliary needs of veterans. VA chose to omit these important health 
care needs for this assessment. The American Legion believes these 
critical omissions adversely impact the effectiveness of 
recommendations resulting from the CARES process. The exclusion of 
these issues in the CARES process denies a complete and accurate 
picture of the demand for these services.
    A case in point is the disparity in demand estimates for nursing 
home beds in VISN 6's Northwest Market. CARES DNCP estimates held that 
the veterans' population in this Market is expected to decline from 
53,000 in fiscal year 2001 to 48,000 in fiscal year 2012, and to 39,000 
in fiscal year 2022. Consequently, the CARES Commission found that 
``current LTC workload at Beckley WV is decreasing and does not 
indicate that more nursing home care beds are needed.''
    This would appear to contradict a 2002 Capital Effectiveness 
Analysis (CEA) conducted by VA's own Office of Policy and Planning in 
collaboration with the Geriatrics and Extended Care Strategic 
Healthcare Group, the Agency for Health Care Policy and Research and 
the University of Michigan. Also cited in the DNCP in a VISN Identified 
Planning Initiative, the CEA study projected ``the elderly population 
in West Virginia to increase from 15.3 percent in 1995 to 24.9 percent 
in 2025, which will put a strain on the private sector nursing homes in 
the area.'' The closest State Veterans Home is 100 miles away and 
Beckley VAMC Extended Care and Rehabilitation Service Line management 
is precluded from using a majority of local nursing facilities because 
of patient safety and quality of care concerns. A new 120-bed nursing 
home was approved for Beckley and initial phases of the project are now 
underway. As a fait accompli, the Commission concurred with the 
project. It is clear, however, that if only CARES data were used to 
estimate NHC bed demand, current capacity would have been deemed 
adequate and many aging veterans in eastern West Virginia would be 
denied safe, quality nursing home care in the coming years.
    The example of Beckley is illustrative of problems with the CARES 
model as applied to long-term care where variables, such as aging 
trends, are not part of the equations. Similar flaws exist in demand 
projections for mental health services and domiciliary. The American 
Legion insists that decisions on services in these areas be deferred 
until accurate projections are available.
    Vacant Space--According to VA's Office of Facilities Management 
(OFM), VA facility assets include 5,300 buildings, 150 million square 
feet of owned and leased space, 23,000 acres of land and a total 
replacement value estimated at $38.3 billion. The Draft National CARES 
Plan proposes to eliminate 4.9 of 8.5 million square feet of vacant 
space, an ambitious 42 percent, by fiscal year 2022. The DNCP calls for 
divestiture and demolition early in CARES implementation as the primary 
methods to reduce vacant space. The Commission notes that much of VA's 
excess property is not contiguous, but consists of pockets of space 
scattered throughout campuses, making it useless for other purposes 
such as Enhanced Use Leasing. Many VA buildings are considered 
historic, further challenging VA's disposal of the properties. The 
American Legion agrees with the Commission's findings that separate 
appropriations are requested to stabilize and maintain historic 
property rather than rely on medical care appropriations.
    The American Legion does not agree with the Commission's finding 
that VA ``. . . aggressively pursue disposal of excess VA property and 
land.'' The American Legion believes a case-by-case effort should be 
made to consider alternative uses of any vacant space before it is 
eliminated, such as: services for homeless veterans, long-term care, 
and the expansion of existing services.
    Contracting Care--The DNCP proposed extensive contracting out of 
care within many of the VISNs in order to meet the projected increased 
demand in services through the peak years. Contracting out of care is 
necessary in some circumstances and inevitable in others, given VA's 
inability to pay competitive salaries to medical professionals. The 
American Legion agrees with the Commission's recommendation that no 
services should be altered until viable services are identified in the 
community. Furthermore, VA must establish quality criteria for 
contracting and monitoring service delivery and training of staff to 
negotiate cost-effective contracts. Fee schedules must be reviewed and 
adjusted to attract qualified practitioners; otherwise Medicare/
Medicaid style difficulties in retaining contract providers may be 
experienced by VA.
    Enhanced Use Lease Agreements--With Enhanced Use Lease Agreements 
(EULs) VA can maximize returns from property that is not being fully 
utilized. EULs allow VA to reduce or eliminate facility development and 
maintenance costs. Through effective use of EULs, VA can receive cash 
or ``in-kind'' consideration (such as facilities, services goods, or 
equipment).
    The DNCP proposed several enhanced use lease agreement projects 
with the public and private sectors. Uses include homeless shelters or 
housing, cultural arts center, cemeteries, inpatient beds, mental 
health services and many other veterans' service enhancing ideas. The 
American Legion believes that EUL agreements that result in the 
development of new strip malls, commercial office buildings, or hotels 
come at the expense of providing real ``enhanced services'' to 
veterans.
    The American Legion recognizes that the EUL process, noted by the 
Commission, is fraught with delays, and a lack of demonstrated 
confidence and insufficient expertise to attract potential investors or 
navigate local zoning and land use requirements, is lengthy and 
complex, and is subject to the ups and downs of local economic 
conditions. The American Legion agrees with the Commission's finding 
that the EUL process needs reform.
    VA/DoD Sharing--There are many opportunities for sharing between VA 
and the Department of Defense (DoD). The DNCP contains 21 high priority 
collaborations/joint ventures out of the 75 proposed throughout VA. 
Both VA and DoD benefit from these agreements and every effort should 
be made to pursue this avenue in order to save money through cost 
avoidance, in particular pharmaceuticals, supplies and maintenance 
services.
    Extra effort on the part of these agencies to cooperate is 
essential in order for sharing to be successful. There is reluctance in 
some parts of the country to ``share'' services or programs between 
agencies. It is imperative that these roadblocks are overcome.
    The American Legion agrees with the Commission's premise that VA/
DoD collaboration should be one of the first considerations in 
addressing health care needs in a local area. However, the focus should 
always be on providing quality healthcare and reasonable access to the 
nation's veterans. If in the VA/DoD sharing process that cannot be 
accomplished, other ways of providing the service must be evaluated and 
the one that most benefits the veterans' community is the option that 
should be exercised.
    Medical School Affiliations--VHA conducts the largest coordinated 
education and training program for health care professions in the 
nation. Medical school affiliations allow VA to train new health 
professionals to meet the health care needs of veterans and the nation. 
Medical school affiliations are a major factor in VA's ability to 
recruit and retain high quality physicians and to provide veterans 
access to the most advanced medical technology and cutting edge 
research. VHA's research has made countless contributions to improve 
the quality of life for veterans and the general population.
    VA's partnership with this country's medical schools continues to 
allow VHA to enhance its ability to provide quality medical care to 
America's veterans, to promote excellence in education and research, 
and to provide back-up medical care to DoD in the event of war or 
national emergency.
    The academic medical model of integrated clinical care, education 
and research is universally accepted as the best means of providing 
high quality and state-of-the-art medical care. The American Legion 
affirms its strong commitment and support for the mutually beneficial 
affiliations between VA and the medical schools of this nation. VA 
medical school affiliates should be appropriately represented as a 
stakeholder on any national Task Force, Commission, or Committee 
established to deliberate on veterans' health care.
    The Fourth Mission--VA's fourth mission is to serve as back up to 
DoD in the case of a national emergency. Any recommendations that are 
implemented as a result of the CARES initiative must ensure that VA is 
capable of fulfilling the fourth mission.
           implementation and integration into strategic plan
    CARES will not end once the Secretary renders his decision. It is 
expected to continue into the future with periodic checks and balances 
to ensure plans are evaluated, as needed, and changes are incorporated 
to maintain balance and fairness throughout the health care system. 
Service areas such as long-term care, mental health services and 
domiciliary capacity, excluded from the CARES process, were to be dealt 
with in strategic planning. The American Legion notes that VA's July 
2003 Strategic Plan 2003-2008 contains a scant two paragraphs of 
generalities on the subject of long-term care. The American Legion will 
be following these issues closely in the coming months and years.
    Mr. Chairman and Members of the Committee, The American Legion has 
raised many concerns today. The recommendations to close VA hospitals 
during a time when hundreds of thousands of soldiers are being sent to 
foreign lands to fight a war and the assessment of long-term care, 
mental health and domiciliary services being pushed back to the next 
cycle of CARES, are serious flaws in an assessment of a system vital to 
the health care needs of this nation's veterans. The American Legion 
has strong reservations against the contracting of veterans' care. The 
Nation is producing more and more veterans in the global fight against 
terrorism, a fight that promises to be lengthy and take its toll on our 
young men and women. Unfortunately, many of these new wartime veterans 
will be dependent on the VA health care delivery system for the rest of 
their lives due to service-connected disabilities. It is imperative 
that we work together to ensure a future system of health care that 
meets the needs of the veterans' community.
    Mr. Chairman, this concludes my testimony. I again thank the 
Committee for this opportunity to express the views of The American 
Legion on the CARES Report and look forward to working with you and 
your colleagues to ensure that the recommendations resulting from this 
unprecedented initiative do indeed result in ``enhanced services'' for 
all of America's veterans and their families.

    Chairman Specter. Thank you very much for that testimony.
    We turn now to Mr. Dennis Cullinan, National Legislative 
Service Director for the Veterans of Foreign Wars. Thank you 
for joining us, Mr. Cullinan. We look forward to your 
testimony.

STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
     SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

    Mr. Cullinan. Thank you very much, Mr. Chairman. On behalf 
of the Veterans of Foreign Wars and our Ladies Auxiliary, we 
thank you for holding today's most important hearing and for 
inviting our participation. I will provide a brief synopsis of 
my written presentation.
    The VFW recognizes that the location of mission of some VA 
facilities may need to change to improve veterans' access and 
to allow more resources to be devoted to medical care rather 
than upkeep of inefficient buildings and to adjust to modern 
methods of health care service delivery. Therefore, the VFW is 
generally supportive of the CARES Commission's recommendations.
    However, we have identified certain recommendations that, 
if adopted, in our view, would hamper or even jeopardize 
veterans' access to quality, timely health care. In addition, 
as has been observed here today, CARES' methodology, statistics 
and facts that it has used are far from certain. We believe 
that all due caution and care have to be invested in the best 
service of America's veteran patients.
    That concludes my testimony, sir.
    [The prepared statement of Mr. Cullinan follows:]

     Prepared Statement of Dennis M. Cullinan, Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    On behalf of the 2.6 million members of the Veterans of Foreign 
Wars of the United States (VFW) and our Ladies Auxiliary, I would like 
to thank you for the opportunity to present our views regarding the 
CARES Commission recommendations.
    The CARES Commission was chartered to make specific recommendations 
to the Secretary of Veterans Affairs on the Under Secretary for 
Health's Draft National CARES Plan (DNCP) regarding the realignment and 
allocation of capital assets necessary to meet the demand for veterans' 
health care services over the next 20 years. The Commission was to 
accept, modify or reject the recommendations of this draft plan. In 
making its recommendations, the Commission was told to focus on the 
accessibility and cost effectiveness of care to be provided, while at 
the same time ensuring that the integrity of VA's health care and 
related missions is maintained, and any adverse impact on VA staff and 
affected communities is minimized.
    To understand the impact of the DNCP on local markets, the 
Commission conducted 38 public fact-finding hearings where testimony 
was received from local Veterans Service Organizations, employee 
organizations, academic affiliates, organizations with collaborative 
relationships and involved elected officials. The VFW was pleased to 
have local representatives participate in 30 of those hearings. While 
all of the recommendations certainly deserve individual attention, I 
will focus my remarks on some of the recommendations that we believe 
are representative of the national plan. I would refer the Committee to 
our statements before the CARES Commission for a more robust and 
complete analysis of the recommendations regarding each specific 
market.
    We recognize that the location and mission of some VA facilities 
may need to change to improve veterans' access; to allow more resources 
to be devoted to medical care, rather than the upkeep of inefficient 
buildings and to adjust to modem methods of health care service 
delivery. Therefore, the VFW is generally supportive of the CARES 
Commission's recommendations, however, we have identified 
recommendations, that if adopted could jeopardize veterans' access to 
quality, timely healthcare.
    The VFW is concerned with recommendations to curtail VA operations 
in Pennsylvania by closing a branch of the VA Pittsburgh Health System 
and scaling back operations in Butler, Altoona and Erie. The 
recommendations would:
    1. Close the hospital on Highland Drive in East Liberty in 
Pittsburgh.
    2. Close acute care services in Butler, Pennsylvania.
    3. Close all acute care beds in Altoona, Pennsylvania.
    4. Close inpatient surgical services and all acute care beds in 
Erie, Pennsylvania.
    The VFW supports the first recommendation but is opposed to the 
remaining recommendations. The consolidation of Highland Drive 
Division's inpatient service to the University Drive campus over the 
past few years resulted in vacant buildings at the Highland Drive 
campus. Since considerable consolidation of services has already taken 
place and the facilities are in close proximity, veterans and 
stakeholders expressed support for the enhancement of service that the 
proposed consolidation would bring. Further recommendations would 
require a veteran residing in Altoona, Butler or Erie to travel to 
Pittsburgh to receive care they once received locally. This rationing 
of services is unacceptable. No veteran, who is sick and/or elderly, 
not to mention their family, should have to drive over 250 miles round 
trip from Erie to Pittsburgh. This approach is inequitable as it is 
overly burdensome for the veteran and quite convenient for the VA.
    Turning to the Northeast, the VFW agrees with the Commission's 
recommendation to create and provide additional services in Boston, MA, 
as well as maintain and not close the Canandaigua VA Medical Center for 
veterans within that primary service area. As for Montrose, N.Y., the 
VFW supports moving several services to Castle Point but would further 
suggest developing a long-term strategic plan for accomplishing the 
move that would ensure the seriously mentally ill patients are not lost 
in the shuffle. As for the recommendation regarding Manhattan/Brooklyn, 
N.Y., the VFW opposes the possible consolidation of these two 
facilities noting the hardship it will cause for elderly veterans 
living on fixed incomes who have no means of transportation.
    Further south, the VFW generally supports the commission's 
recommendations regarding Beckley, WV, facility. We agree that multi-
specialty outpatient services should remain at this small facility and 
we would also support a new nursing home because long-term care is 
needed in WV. The VA must ensure that contracting is feasible and that 
the local community can effectively provide the necessary services. 
While in Florida, the VFW supports the construction of a new bed tower 
in Gainesville while retaining inpatient services at Lake City.
    In the Midwest, the VFW is opposed to the closure of the VAMC in 
Brecksville, OH. The recommendation would transfer functions currently 
performed there to Wade Park. This will not only add to travel time of 
the patients now receiving care at Brecksville, it will also exacerbate 
an already intolerable parking situation at the Wade Park facility.
    Finally, out West in Texas, the VFW is concerned with the closure 
of the WACO VAMC. We would reiterate veterans' concerns regarding 
travel and access The VA is in a much better position to go to the 
veteran rather than the veteran to the VA.
    It is important to point out that the VFW believes that any action 
to reconfigure or expand long-term care or mental health facilities 
should be developed in a strategic plan because the DNCP originally 
ignored these service areas. This plan should be based on well-
articulated policies and address access to services.
    Mr. Chairman, this concludes my remarks and I would be pleased to 
respond to any questions you or the Members of the Committee may have.

    Chairman Specter. Thank you very much, Mr. Cullinan. I 
agree with what you say. They really haven't made their case, 
and we appreciate your coming in to give us the view of the 
veterans. We always appreciate your help.
    We turn now to Ms. Joy Ilem, Assistant National Legislative 
Director for Disabled American Veterans.

   STATEMENT OF JOY J. ILEM, ASSISTANT NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Ms. Ilem. Thank you, Mr. Chairman. We appreciate the 
opportunity to present the views of the Disabled American 
Veterans regarding the recommendations of the CARES Commission 
report.
    Access to high-quality, timely health care services is 
essential for many DAV members. Therefore, the preservation of 
the integrity of the VA health care system and its specialized 
programs is of the utmost importance to DAV and our members.
    We concur with many of the commission's recommendations 
relative to the identified cross-cutting issues, and we are 
also pleased that the commission addressed many of our 
concerns, specifically the need for further development of the 
CARES model and projections for mental health care services, 
the need for VA to develop a more cohesive long-term care 
strategy, and the need for reassessment of the proposed 
placement of domiciliaries and associated programs.
    We will continue to rely on the expertise of our members to 
make recommendations regarding the VA medical facilities they 
use and rely on. Our members are intimately familiar with the 
unique elements and the impact on each VISN and the medical 
centers and the CBOCs within their local areas.
    From a national perspective, we are opposed to facility 
closure and consolidation or transfer of services at any 
location for purely budgetary reasons. VA must ensure, in cases 
where these decisions are determined to be the only reasonable 
option, that resources and alternate access to care options are 
in place prior to the realignment or transfer of services. 
Under no circumstances should veterans experience a decrease in 
primary or specialty care services, or denied access to 
specialized programs.
    Oversight by Congress, veterans and veteran service 
organizations is going to be essential to the overall success 
of this important initiative. Although we agree with the 
commission that the final plan should be national in scope, we 
hope there is sufficient consideration given to the concerns 
expressed by veterans and other stakeholders as the Secretary 
makes his final decision.
    That concludes my statement. Thank you.
    [The prepared statement of Ms. Ilem follows:]

   Prepared Statement of Joy J. Ilem, Assistant National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee: On behalf of the 
Disabled American Veterans (DAV) and its Auxiliary, we are pleased to 
express the national views of the organization on the Capital Asset 
Realignment for Enhanced Services (CARES) February 2004 Report To The 
Secretary Of Veterans Affairs. The CARES Commission was established by 
Department of Veterans Affairs (VA) Secretary Anthony J. Principi as an 
independent body to review the Draft National CARES Plan (DNCP) 
regarding the realignment and allocation of capital assets necessary to 
meet the demand for veterans' health care services over the next 20 
years.
    The Veterans Health Administration (VHA) is the largest direct 
provider of health care services in the United States and offers 
specialized care that is world renown to veterans with amputations, 
spinal cord injury, blindness, posttraumatic stress disorder, and brain 
injury. In recent years, VHA has established itself as a leader in the 
delivery of quality health care and is also the nation's primary backup 
to the Department of Defense (DoD) in time of war or domestic 
emergency. According to VA, the goal of CARES is to enhance access to 
health care services for our nation's veterans, while insuring the 
integrity of its health care system. One of the most important VA 
benefits for service-connected veterans is health care. Access to high 
quality, timely health care services is essential for many DAV members, 
especially those who have suffered severe or catastrophic disabilities 
as a result of their military service. Therefore, preservation of the 
integrity of the VA health care system and its specialized programs is 
of the utmost importance to the DAV and our members.
    DAV is looking to CARES to provide a framework for the VA health 
care system that can meet the needs of sick and disabled veterans now 
and into the future. From a national perspective, DAV firmly believes 
that realignment of capital assets is critical to the long-term health 
and viability of the entire VA health care system. We do not believe 
that restructuring is inherently detrimental; however, we are dedicated 
to ensuring the needs of special disability groups are addressed and 
remain a priority throughout the CARES process. As CARES has 
progressed, we have continually emphasized that all specialized 
disability programs and services for spinal cord injury, mental health, 
prosthetics, and blind rehabilitation should be maintained at current 
levels as required by law.
    The Commission stated in its report that CARES is the most 
comprehensive assessment ever undertaken by VA to determine the capital 
infrastructure needed to provide modern health care to veterans now and 
in the future. DAV agrees with the Commission that the CARES process is 
extremely important as it will impact the system and the delivery of 
health care services to veterans for decades. Like veterans of previous 
wars, many of the men and women serving today in our Armed Forces in 
Iraq, Afghanistan, and other hot spots around the world, will need and 
depend on the VA health care system. It is our obligation to ensure 
they have access to a strong and viable health care system, dedicated 
specifically to their health care needs.
    Initially, we want to recognize and thank the members of the CARES 
Commission for their intensive effort in analyzing the vast amount of 
information associated with CARES and for the Commission's thoughtful 
report. DAV believes the Commission conducted a rigorous and thorough 
review of the available information provided by the National CARES 
Program Office given the timeframe limitations and provided a 
comprehensive assessment and analysis of the CARES data and the DNCP. 
It is apparent in the Commission's final report that many of the 
concerns expressed by the DAV and other veterans service organizations 
(VSOs) were addressed during deliberations and included in its final 
recommendations.
    In our testimony, we will refrain from commenting on specific 
recommendations made by the Commission relating to consolidation, 
closure, transferring, or realignment of services at individual 
facilities or Veterans Integrated Service Networks (VISNs). Testimony 
provided by DAV members at the 38 formal hearings conducted by the 
Commission will serve as the official position related to proposals 
made in the DNCP for specific regions or medical facilities. Rather, 
our remarks will focus on the crosscutting issues identified by the 
Commission in its report, including facility mission changes, 
community-based outpatient clinics (CBOCs), mental health services, 
long-term care, long-term mental health care, excess VA property, 
contracting for care, infrastructure and safety, research, education 
and training, special disabilities programs, and VA/Department of 
Defense (DoD) sharing.
                        facility mission changes
    There were a number of instances where the DNCP proposed 
consolidation or realignment of services, closure of inpatient 
services, or closure of existing services, including long-term care 
services. In some cases, the Commission rejected the DNCP proposals, 
other times it concurred with them, made its own recommendation, or 
suggested additional study prior to a final decision.
    DAV will continue to rely on the expertise of its members to make 
recommendations about the VA medical facilities they use and rely on. 
They are familiar with the unique elements that impact each VISN, VA 
Medical Center (VAMC) and CBOC in their local area taking into 
consideration the local terrain, specific challenges due to urban, 
rural, or highly rural areas, local weather conditions, and various 
other factors.
    From a national perspective DAV is opposed to facility closure, 
consolidation or transfer of services at any location for purely 
budgetary reasons. VA must ensure, in cases where these decisions are 
determined to be the only reasonable option, that resources and 
alternate access to care options are in place and available to veterans 
prior to the realignment. Under no circumstances should there be a 
decrease in services or denied access to needed programs and services. 
Additionally, careful consideration must be given to ensure 
transportation to alternate facilities is available and that services 
are not interrupted for veterans who need them.
               community-based outpatient clinics (cbocs)
    The VISNs proposed 242 new CBOCs nationwide to address outpatient 
access issues, increasing workload capacity for primary and mental 
health care and space deficiencies at VA Medical Centers (VAMCs). The 
DNCP divided the proposed clinics into three priority groups. The 
Commission noted that the methodology used by VA generally led to CBOCs 
in rural areas being placed in the second priority group and left some 
markets with growing outpatient demand out of priority group one. We 
agree with the Commission's findings that, ``. . . VA's rationale for 
prioritizing the implementation of new CBOCs was to control new demand 
for care, which disproportionately disadvantages rural veterans and is 
contrary to the goal of CARES.'' We believe the CARES process should be 
data driven and if VISN data supports the need, through market share 
analysis, for additional outpatient clinics, CBOCs should be 
established without regard to the priority group requirements outlined 
in the DNCP. It should be left up to Congress to authorize sufficient 
funding to meet the projected need for additional clinics.
                         mental health services
    Of great concern to DAV is the error in calculating the gaps in 
mental health services identified by VA mental health experts. 
Initially, we were pleased that the CARES office convened a special 
mental health workgroup which acknowledged the error represented an 
underestimation of future outpatient mental health needs by 
approximately 34 percent. Disappointingly, the corrections made by the 
workgroup and the revised projections still have not been run or 
distributed to the field. Mental health experts briefed the Commission 
on several occasions and provided detailed information about the 
problems this flaw in the model presents and the impact of erroneous 
data for future planning of mental health services. We are pleased the 
Commission acknowledged in its report this serious flaw in the model as 
well as the significant variation in the current provision of mental 
health services across the VISNs, including CBOCs.
    We agree with the Commission's recommendations that the CARES data 
for outpatient mental health services and acute psychiatric inpatient 
care be corrected and forwarded to all networks as soon as possible so 
that VISNs can quickly identify and revise plans to address any gaps in 
service which should be integrated into the ongoing CARES process.
    Additionally, VA should properly assess the need for outpatient 
mental health care space requirements and ensure VHA is providing 
needed mental health services in VA CBOCs. Based on VHA data, over 28 
percent of users of VHA care have a mental health diagnosis and over 
460,000 are service connected for mental health disorders, including 
posttraumatic stress disorder and psychoses. In fiscal year 2003, 
nearly 800,000 veterans used mental health services at VA facilities. 
Mental health services like long-term care services make up the core of 
specialized services within VHA. This particularly vulnerable 
population is at higher risk for being disenfranchised during the CARES 
process. Several of the sites under consideration for transfer or 
consolidation of services are in areas where there are specialized 
programs to treat veterans with complex mental health, substance abuse, 
and violent behavioral problems. In many cases, closure of a treating 
facility is devastating for these fragile patients and their families 
who have come to depend on these specialized programs. Can we ensure 
these veterans will be better severed and have reasonable access to 
similar programs in a nearby location? In some cases, it may be more 
cost effective for VA but is the veteran patient best served? 
Disruption of longstanding treatment in a familiar facility can often 
lead to a setback for the patient with serious mental illness.
    Given veterans' reliance on and need for these highly specialized 
programs, we urge the Secretary to include this critical care component 
prior to his decision and finalization of the CARES plan.
            long-term care and long-term mental health care
    The need for long-term care services, which includes nursing home, 
domiciliary, and non-acute inpatient and residential mental health 
services remains a complex issue. Initially, VA identified through its 
CARES model the projected need for more than 17,000 additional nursing 
home beds to meet the future needs of aging veterans. Unfortunately, VA 
took this issue off the table and has not made a formal policy decision 
regarding the long-term care needs of veterans other than to say that 
VA will focus on alternate home health care options. VA's Under 
Secretary for Health has stated on several occasions that veterans do 
not want to be in extended care facilities, but rather prefer to 
receive care in their homes. Although this may be true, realistically, 
many veterans do not have a spouse or family member that can act as 
care-giver and many veterans will need the level of care provided in an 
institutional setting and will not be able to remain at home.
    Additionally, it appears VA is adhering to the letter of the law, 
rather than the spirit of the law, related to extended care services, 
providing this type of care only to veterans with service-connected 
disability ratings 70 percent or higher or to veterans who need such 
care for their service-connected condition. Whenever possible, VA 
prefers to relegate long-term cares services to the community in either 
State nursing homes, many of which are filled to capacity, or through 
State Medicaid programs. Unfortunately, VA has not been as diligent in 
its oversight of the quality of care provided in these alternate 
settings. Transfer of patients receiving extended care services to a 
nearby location can often be devastating to an elderly patient and his 
or her family. Elderly spouses or family members are often frail 
themselves and unable to drive long distances to see their loved ones. 
VA must also take into consideration that these family members may be 
unable to visit regularly and help assist their loved ones on a daily 
basis. Additionally, there is the issue of extended care services for 
patients with serious mental disorders.
    Many VA patients with dementia and other complex mental health 
issues generally do not make good candidates for transfer to community 
long-term care nursing facilities. In many cases, the private sector is 
unable or unwilling to accept seriously chronically mentally ill 
patients, who are often difficult to manage. It seems incredible that 
VA has chosen not to include this portion of care services in CARES 
Phase II, given that long-term care is one of the most important and 
integral components of health care today. To leave this critical piece 
out of the CARES equation will only compound the problems associated 
with VA's capital asset planning and restructuring in the years to 
come. It is difficult to be supportive of the process when 
consideration of such a key component is left hanging. Of equal concern 
is that, although this issue was not fully addressed in the DNCP, there 
are proposals in the plan for closures and/or transfer or consolidation 
of services that directly impact on long-term care and mental health 
inpatient services. The DNCP includes proposals for consolidations or 
realignments with significant extended care components and construction 
of new extended care facilities in some locations. We also note that 
there is significant variability in the delivery and access to extended 
care services throughout the networks. The Commission notes that there 
seems to be inconsistency in proposals of where to locate long-term 
care facilities, i.e., placement of extended care centers near medical 
facilities or free standing. We agree that VHA should develop clear 
criteria for the placement of extended nursing home beds/units and that 
there should be uniformity and equal access to such services across the 
networks with a focus on quality of care.
    We concur with the Commission's findings regarding long-term care. 
Specifically, that VA has not developed a consistent rationale for the 
placement of long-term care units, has not adequately addressed the 
needs of aging, seriously mentally ill patients, and that the proposal 
for movement of domiciliary beds is inconsistent with established 
programs.
    The integral nature of the placement of domiciliaries and programs 
for homeless veterans, substance abuse treatment, and other specialized 
VA programs warrant additional study and consideration by experts in 
these unique program areas.
                           excess va property
    Dealing with identified excess VA property remains a complex issue. 
VA's plan is projected to result in a 42 percent reduction in vacant 
space over a 20-year period. VA identified in its evaluation process 
that it had approximately 8.5 million square feet of vacant space. In 
the VISN evaluations, space that was not utilized for patient care, 
support patient care or other VA missions, was identified as vacant. 
According to the DNCP, such space was proposed for demolition, 
divestiture or lease or enhanced-use lease (EUL) authorization 
agreements. The plan points out that demand for possible vacant space 
at VA facilities could change in the future based on a variety of 
factors, including changes in the economy or in the practice of health 
care delivery. VA pointed out that in many cases unused space is not 
appropriate for alternative use due to the specific location of the 
building in relationship to other campus buildings, i.e., the unused 
space may be located in outlying buildings or on upper floors, 
therefore unsuitable for modern medical functions or attractive for 
other uses. The plan also notes that the savings, profits and costs 
associated with the management of vacant space is complex and difficult 
to standardize. According to VA, total savings from proposals such as 
closure of facilities identified in the DNCP have not been fully 
evaluated.
    We agree with the Commission's findings that there was heavy 
reliance on EUL proposals in the DNCP and that the planning and the 
process, as it currently exists, have been fraught with delays and have 
led to significant lost opportunities. Although this program offers the 
best way to retain resources for direct patient care, improvements need 
to be made for the program to be more advantageous. We support the 
Commission's recommendation to reorganize and streamline the EUL 
program to best achieve VA's goals. The Commission also commented that 
maintaining buildings or excess land requires VA to utilize medical 
appropriations that could be used for direct patient care. We are 
extremely concerned about the sale of VHA properties and the reported 
requirement that such funds cannot be retained for patient care but 
must be returned to the Treasury.
    DAV does not want to see resources that can be used for direct 
patient care used to maintain unused infrastructure or buildings that 
cannot be cost-effectively reused for providing medical services. 
However, we believe VA should be allowed to maintain funding from 
leasing or sale of these structures for patient care. VA should 
carefully consider its analysis of unused space and deal with it 
appropriately, keeping in mind that some space is located in historic 
structures and must be preserved and protected according to the law. 
When appropriate, space should be used for enhanced use lease for 
veteran-related programs.
                          contracting for care
    The Commission found several benefits for contracting for care in 
the community, including additional capacity and improved access in a 
more timely manner than can be accomplished through a capital 
investment; flexibility to add or discontinue services as appropriate; 
and increased access in areas with smaller workloads, such as highly 
rural areas.
    We recognize that contracting for care is sometimes necessary to 
ensure services are available. For example, when a veteran lives in a 
remote geographic location, or if VA has only a limited number of 
veterans that need care in a specific area, it is not always able to 
recruit or attract full-time clinicians to staff a CBOC. However, under 
such circumstances, VA should establish and adhere to strict guidelines 
when contracting for care to ensure continuity of care and proper 
patient oversight is maintained. To ensure high quality comprehensive 
health care services and continuity of veteran patient care, 
contracting for health care services should only occur when such 
services are unavailable in VA facilities, geographically inaccessible, 
or in certain emergency situations. The VA health care system was 
developed to meet the complex and frequently unique health care needs 
of veterans. Whenever possible, VA should be the provider of health 
care to our nation's sick and disabled veterans.
                       infrastructure and safety
    Unfortunately, VA's construction budget has decreased sharply over 
the last several years with political resistance to fund any major 
projects before VA developed a formal capital asset plan. Many 
desperately needed construction and maintenance projects, including 
seismic repairs that could potentially compromise patient safety, have 
been unnecessarily delayed. DAV strongly believes that CARES should not 
distract VA from its obligation to protect its physical assets whether 
they are to be used for current capacity or realigned.
    VHA identified 63 sites requiring seismic correction. The DNCP 
prioritized 14 sites that require immediate seismic strengthening. We 
agree with the Commission's recommendations that patient and employee 
safety is the highest priority for VA CARES funding and that VA should 
seek the funding necessary to correct the identified seismic 
deficiencies as soon as possible.
    Any construction needed to repair seismic deficiencies or to ensure 
patient safety at VA health care facilities should be completed 
immediately on buildings identified through the CARES process to remain 
in the system for patient care. Careful consideration should be given 
to ensure that the most cost-effective plan is chosen if there is a 
need for renovation of older buildings. In many cases, it is more cost 
effective to build a new facility rather than conduct major renovations 
on an existing property. If space is not appropriate for its purpose, 
renovation plans will be larger and more inefficient and therefore cost 
more, not less.
                    research, education and training
    Without question, VHA provides the most extensive training 
environment for health care professionals and allows VA to provide top 
quality cutting edge health care services to our nation's veterans. 
Medical school affiliations are critical to VA's mission and they 
should be treated as partners in the planning and implementation stages 
of CARES. DAV, as part of The Independent Budget notes that VA has 
academic affiliations with 107 medical schools, 55 dental schools, and 
more than 1,200 other schools across the country. Each year, more than 
81,000 health professionals are trained in VA medical centers. In 
addition to their value in developing the nation's health care work 
force, the affiliations bring first-rate health care providers to the 
service of America's veterans. The opportunity to teach attracts the 
best practitioners from academic medicine and brings state-of-the-art 
medical science to VA. Veterans get excellent care, society gets 
doctors and nurses, and the taxpayer pays a fraction of the market 
value for the expertise the academic affiliates bring to VA.
    The Commission recognized the importance of education and training 
within VA but found that medical schools and other affiliates have not 
made the transition from traditional inpatient teaching modalities to 
community-based educational programs in VA. The Commission recommended 
that VA develop a plan to address this issue by adding a community-
based component to VA's educational programs. DAV supports the 
Commission's recommendation.
                     special disabilities programs
    We are satisfied with the proposed placement of spinal cord injury/
disorder (SCI) and blind rehabilitation centers in the DNCP. We concur 
with the Commission's recommendations to: (1) improve coordination 
between VISNs with regard to placement of special disability centers to 
optimize access to care for catastrophically disabled veterans; (2) 
develop new opportunities to provide blind rehabilitation in outpatient 
settings; and 3) conduct an assessment of acute and long-term bed needs 
for SCI centers to provide the proper balance of beds and reduce wait 
times.
                 va/department of defense (dod) sharing
    The DNCP proposed 75 collaborative opportunities for VA/DoD 
sharing. The Commission supported the recommendations of the 
President's Task Force to Improve Health Care Delivery for Our Nation's 
Veterans concerning this issue, and recognized VHA's vital role and 
fourth mission to act as the nation's primary backup to DoD in time of 
war or domestic emergency. Given the current State of world affairs, 
DAV considers this a critical part of VA's overall mission. We concur 
with the Commission that as the CARES process proceeds, careful 
consideration must be given to this function of the VA as it relates to 
VA's physical assets. As a nation, in the future, we may need VA's 
support if there are additional terrorist attacks levied at the 
American people. We must be prepared to deal with any given scenario 
and ensure not only the safety of our nation's sick and disabled 
veterans, but all our citizens. The VA health system is a natural 
safety outlet in this regard if given the proper resources and support 
to carry out this critical mission.
                             research space
    As stated in The Independent Budget, VA medical and prosthetic 
research is a national asset that helps attract high caliber clinicians 
to practice medicine and conduct research in the VA health care system. 
The resulting environment of medical excellence and ingenuity, 
developed in conjunction with collaborating medical schools, benefits 
every veteran receiving care at VA and ultimately all Americans. We 
agree that research opportunities are an important component of VA 
health care and that the proposals outlined in the DNCP for enhancing 
research space should be carried out.
                               the future
    Finally, in Appendix E of the report, the Commission discussed 
problems it encountered relating to cost effectiveness analysis 
submitted by the VISNs. A team was assembled by the Department to help 
the Commission analyze the data but was not briefed on the methodology 
utilized in realignment studies conducted by the VISNs. The Commission 
noted that the team had to accept the cost estimates and workload 
projections provided, without an opportunity to verify them. The 
Commission noted that inconsistencies and errors in data were found in 
the proposals and could mislead decisionmakers unless a more detailed 
analysis is completed. The Commission stated that only a preliminary 
analysis of the cost effectiveness of the proposals could be 
accomplished, given the extreme limitations on time available to 
complete the work.
    This serves as one more example of the consequences of the 
aggressive schedule that VA maintained for CARES. On several occasions, 
DAV expressed concern about the compressed schedule for CARES Phase II. 
We support expeditious resolution of VHA's capital asset problems; 
however, we strongly urged VA to slow down and get it right the first 
time. After starting CARES Phase II, VA acknowledged problems in the 
model with respect to mental health, long-term care and domiciliaries. 
It chose to take these issues ``off the table'' and instead of 
developing solutions and extending CARES deadlines, VA chose to push 
ahead, stating that it would address these critical issues after CARES 
Phase II was completed, in its strategic planning process.
    As this phase of the CARES process comes to a close, we watch with 
some trepidation the final outcome. In reality, this is only the 
beginning of CARES with future consideration of master implementation 
plans at the national and local levels, uncertainty of Congressional 
support and funding of the process, timeframes and priority for 
individual project development. DAV strongly believes that mandatory 
funding for VA health care is necessary not only to ensure that 
veterans receive timely quality health care but to ensure continuation 
of the CARES process and ultimately the viability of the VA health care 
system.
    In closing, we thank the Committee for convening this hearing today 
and allowing DAV the opportunity to express our views on this important 
issue. Although the Commission had a daunting task, we are thankful 
that many of the concerns of veterans throughout the country have been 
heard and were carefully considered as the Commission completed its 
final deliberations. Although we agree with the Commission that the 
final plan should be national in scope, we hope there is sufficient 
consideration given to local concerns by veterans and other 
stakeholders as the Secretary issues his final decision. There should 
be sufficient cost-benefit analysis data to support any proposals on 
consolidations or transfer of services. Ultimately, the goal of 
enhanced health care services for our nation's sick and disabled 
veterans and proper stewardship of the VA health care system is our 
main concern on behalf of the nation's 2.6 million disabled veterans.
    Finally, we agree with the Commission's recommendation to establish 
an independent advisory body, with appropriate charter and authority to 
monitor and advise the Secretary on the ongoing integration of CARES 
into VA's strategic planning process. Oversight by Congress, veterans, 
VSOs and other interested parties will be essential to success of this 
important initiative.

    Chairman Specter. Well, thank you very much, Ms. Ilem.
    We turn now to Mr. James Doran, National Service Director 
for AMVETS.
    Thank you for joining us and the floor is yours.

 STATEMENT OF JAMES W. DORAN, NATIONAL SERVICE DIRECTOR, AMVETS

    Mr. Doran. Good afternoon, Mr. Chairman. On behalf of 
AMVETS National Commander John Sisler and the nationwide 
membership of AMVETS, I am pleased to offer our views of the 
CARES Commission report that has been submitted to the 
Secretary.
    Generally, AMVETS supports the CARES process. We understand 
that, under CARES, the Veterans Health Administration is going 
to close some facilities and some employees will be lost. Our 
primary concerns here are two-fold.
    Access to health care for veterans must be maintained and 
if reductions in force are required, we request that military 
veterans, and especially disabled veterans employed by the VHA 
be retained in all cases.
    In the last century, Mr. Chairman, your father was wounded 
in action during World War I, denied his benefits by our 
Government and participated in the second veterans march on the 
Capitol. Captain Jeffords, Colonel Graham, Sergeant Miller, 
Airman Campbell, Army Engineer Akaka and 25 million other of 
their comrades in arms must never be forced to suffer the same 
indignation as your father. That is one of the purposes of both 
this Committee and AMVETS.
    There are flaws in the CARES Commission report, just as 
there are flaws in the draft National CARES Plan. The 
commission has addressed many of these flaws. AMVETS, on the 
other hand, has not had the opportunity to fully digest the 
commission report.
    We do feel that any study involving excess or surplus 
property should consider all methods of divestiture, which I 
believe is the term they used in the commission, with the funds 
being retained by the VA, not being moved back into the 
Treasury for use in the general fund. We also would like to 
see, prior to closing any inpatient services at any facilities, 
that replacement care is in place and up and running before a 
closure takes place.
    In developing sharing agreements between VA and DoD, we 
recommend that the agreements be signed by both the Under 
Secretary for Health and the appropriate service secretary. 
This would preclude military-base commanders from repudiating 
the agreement at a future date. AMVETS also does not want to 
see DVA-DoD joint clinics located inside the security fence at 
military installations. In case of increased defense 
conditions, these bases would be locked down and veterans would 
be denied access to care.
    We would like to also express our thanks to Chairman 
Alvarez and his commission for all their hard work.
    That concludes my testimony, Mr. Chairman.
    [The prepared statement of Mr. Doran follows:]

Prepared Statement of James W. Doran, National Service Director, AMVETS
    Good Afternoon Mr. Chairman and Ladies and Gentlemen of the 
Committee. 1On behalf of AMVETS National Commander S. John Sisler and 
the nationwide membership of AMVETS, I am pleased to offer our views of 
the CARES Commission Report to the Secretary of Veteran Affairs.
    For the record, AMVETS has not received any Federal grants or 
contracts during the current fiscal year or during the previous 2 years 
in relation to any of the subjects discussed today.
    Mr. Chairman, AMVETS has been a leader since 1944 in helping to 
preserve the freedoms secured by America's Armed Forces. Today, our 
organization continues this proud tradition, providing not only support 
for veterans and the military in procuring their earned entitlements, 
but also an array of community services that enhance the quality of 
life for this Nation's citizens. Title 38, United States Code, Section 
1710 states that ``The Secretary shall furnish hospital care and 
medical services which the Secretary determines to be needed to any 
veteran for a service-connected disability and to any veteran who has a 
service-connected disability rated at 50 percent or more.'' The Statute 
delineates, in more detail, to whom the Secretary shall furnish 
hospital care and medical services. The CARES Commission reports that 
``Access and Quality of Care should be the primary drivers in 
recommending changes to meet the health care needs of veterans.''
    Generally, AMVETS supports the CARES process. However, we feel that 
in some Veterans Integrated Service Networks, the needs of the veteran 
may not be the primary focus of local, mid-level, management.
    We understand that, under CARES, the Veterans Health Administration 
is going to close some facilities. They may increase the services at 
other facilities, open additional Community Based Outpatient Clinics, 
or utilize contracted health care to replace closed facilities. Some 
employees will undergo a Reduction in Force, others will be 
transferred, and still others will be offered early retirement. Our 
primary concerns here are twofold. Access to healthcare for veterans 
must be maintained. If Reductions in Force are required, we request 
that military veterans, and especially disabled veterans, employed by 
the Veterans Health Administration, be retained in all cases.
    In the last century, Mr. Chairman, your father, wounded in action 
during World War One, was denied his benefits by our Government and 
participated in the Second Veteran's March on the capital. Senator 
Murray's father, a wounded and disabled veteran of World War Two; Navy 
Captain Jim Jeffords; Air Force Lieutenant-Colonel Lindsey Graham; 
Marine Sergeant Zell Miller; Airman Second Class Ben Campbell; Army 
Engineer Danny Akaka; and their 25 million plus comrades-in-arms must 
never be forced to suffer that same indignation. That is one of the 
purposes of both this Committee and AMVETS.
    There are, I'm sure, flaws in the CARES Commission Report, just as 
there are flaws in the Department of Veteran Affairs Draft National 
CARES Plan. The Commission has addressed many of the Draft National 
CARES Plan's flaws. AMVETS, however, has not had the opportunity to 
fully digest the CARES Commission Report. Yet, we do disagree with a 
few of the Commissions recommendations:
    1. ``. . . any study involving excess or surplus property should 
consider all options for divestiture, including outright sale. . .'' An 
outright sale of VA property would cause the VA to lose money. Enhanced 
use of the properties enables VA to use rental revenues to bolster 
their budget. Outright sale currently requires that funds realized go 
to the US Treasury for deposit into the General Fund. An outright sale 
of VA property would prove to be detrimental to the veteran community.
    2. Prior to closing any inpatient services in Altoona, Butler, and 
Erie, PA, VA must ensure that local hospitals are contracted to provide 
that care. Travel time for many of the veterans served by these 
facilities, and that of their loved ones, between their homes and 
Pittsburgh could prove to be detrimental to their care.
    3. In developing sharing agreements between VA and the Department 
of Defense, we recommend that the agreements be signed by the Under 
Secretary for Health and the appropriate Service Secretary. This would 
preclude military base commanders from repudiating the agreement at a 
future date. AMVETS also does not want to see DVA/DOD Joint Clinics 
located inside of the security fence at military installations. In case 
of an increased Defense Condition these bases would be ``locked down'' 
and access to health care denied to veterans.
    The FY2004 VA appropriation gives the Secretary authority to 
transfer up to $400 million to CARES construction from VA's medical 
care account. AMVETS would like to see the Secretary pursue an 
aggressive, accelerated construction program in order to upgrade and 
improve the efficiencies of VA health care delivery as soon as 
possible. A moratorium has been in place awaiting the conclusion of the 
CARES process and such an acceleration would help move VA more quickly 
to a system where every dollar of the budget is better used to improve 
access and quality of care. We would, however, trust that the Secretary 
would not proceed on an accelerated schedule until the backlog of 
veterans waiting 6 months or more for their first doctor's appointment 
is fully eliminated. In any event, since the Administration's fiscal 
year 2005 budget request projects a carryover of approximately $800 
million of medical care resources from this year's budget to next 
year's, AMVETS fully expects that accelerating the CARES facilities 
recommendations should not have a negative affect on the delivery of 
veterans health care. Certainly with that much cushion in the 
Secretary's healthcare budget, we might expect not only an accelerated 
enhancement of facilities, but discontinuance of the ban on Priority 8 
veterans access to the system.
    Mr. Chairman, as I previously mentioned we have not been able to 
fully study the CARES Commission Report. The areas I've mentioned are 
just a few examples of items with which AMVETS is concerned. We are 
more than willing to provide this Committee with a full, written, 
comment sheet in the near future. We would like to express our thanks 
to Chairman Alvarez and his Commission for all of their hard work. 
AMVETS acknowledges that the Veteran Health Administration has a strong 
need for capital improvements. However, we would like to remind the 
Committee that although the VA provides some of the best health care in 
the Nation, the quality of care is insignificant if the veteran cannot 
access that care.
    AMVETS National Executive Committeeman from Ohio, J.P. Brown III, 
summed up our view at a CARES Commission hearing, last August, when he 
said, ``[The VA does] . . . a good job with the resources available to 
them. I encourage you to support this next step. It is an important 
advance in addressing the physical facilities of the VA. . . . and 
providing the resources that are needed to keep America's promise to 
veterans.''
    Mr. Chairman, that concludes my testimony.

    Chairman Specter. Thank you very much, Mr. Doran.
    Our final witness is Mr. Fred Cowell, Health Policy Analyst 
for the Paralyzed Veterans of America. The floor is yours, Mr. 
Cowell.

  STATEMENT OF FRED COWELL, HEALTH POLICY ANALYST, PARALYZED 
                      VETERANS OF AMERICA

    Mr. Cowell. Mr. Chairman, Members of the Committee, PVA 
appreciates this opportunity to share some of our observations 
concerning the CARES Commission's final report that is designed 
to realign the VA's health care system.
    In the interest of the Committee's valuable time, I will be 
brief and focus on those recommendations that have the most 
significant implications for veterans with spinal cord injury 
or disease.
    PVA is pleased to see the CARES Commission recognize the 
importance of expanding VA's spinal cord system of care by 
calling for four new SCI centers in VISNS 2, 16, 19 and 23. 
However, PVA would like to point out that the commission also 
supported the establishment of a new SCI center in VISN 4, but 
this recommendation did not appear as written language in the 
final report. A new SCI center in VISN 4 will greatly enhance 
access to VA SCI services for thousands of East Coast veterans, 
especially for those who live in Pennsylvania, Delaware and 
northern Maryland.
    In the area of SCI long-term care, PVA supports the 
commission's recommendations for adding long-term care beds in 
VISN 8, 9, 10 and 22. These beds represent a significant first 
step toward solving the long-term care demand crisis that is 
looming for aging veterans with spinal cord dysfunction.
    Regarding new SCI outpatient clinics, PVA would like to 
point out the importance of VA establishing an SCI outpatient 
clinic at Castle Point as the Bronx SCI consolidation takes 
place, the need for a new multi-specialty outpatient clinic in 
the Las Vegas area that includes spinal cord injury, and the 
commission's recommendation for an SCI outpatient clinic to be 
established in VISN 4 at the Philadelphia VAMC.
    When considering facility closures, PVA is concerned with 
the commission's recommendation to study the feasibility of 
constructing a new mega-hospital in the Boston area, VISN 1. If 
this new hospital were to become a reality, it would displace 
thousands of veterans and result in the closure of VA's SCI 
center at West Roxbury and the designated SCI long-term care 
facility at Brockton. PVA feels that other commission closure 
or mission change recommendations must be guided by the 
principle that access and quality of VA health care will be 
improved by their development.
    Mr. Chairman, this concludes my remarks.
    [The prepared statement of Mr. Cowell follows:]

       Prepared Statement of Fred Cowell, Health Policy Analyst, 
                     Paralyzed Veterans of America
    Mr. Chairman and Members of the Committee let me begin by thanking 
you for your continued advocacy on behalf of our nation's veterans. 
Paralyzed Veterans of America.
    (PVA) greatly appreciates the commitment of this Committee and your 
staff and thank you for your willingness to hear our concerns and work 
with us to find solutions.
    Now that the CARES Commission has delivered its final report, I 
would like to share with you a few observations we have made about the 
Commission's recommendation before you make your own final decisions 
concerning CARES. For the purpose of this hearing and throughout the 
entire CARES process PYA has focused on those elements that have 
implications for the availability and quality of care provided veterans 
with spinal cord injury or dysfunction. Clearly, we are very pleased to 
see that the Commission is supportive of expanding VA's Spinal Cord 
System of Care by recommending new SCI Centers in four VISNs and 
adding, much needed, additional long term care capacity in four others.
    In the spirit of providing the very best care for those veterans 
with spinal cord injury, we offer the following observations for your 
consideration:
                    new sci centers recommendations
    As stated previously, PYA is pleased to see the Commission's 
recommendations for the addition of four new 3D-bed SCI Centers in 
VISNs 2, 16, 19, and 23. These new Centers will greatly improve access 
to VA SCI services in these areas of the nation.
    However, PYA would point out that while there is no final 
Commission report recommendation language to add a new SCI Center in 
VISN 4, Chairman Alvarez said, at the conclusion of the CARES final 
report briefing on February 13, 2004, that ``the Commission supported a 
new SCI center in the southeastern portion of VISN 4.'' PYA strongly 
supports this verbal Commission recommendation and believes the CARES. 
projection model clearly supports the need for an additional SCI Center 
in VISN 4.
    PVA also supports the Commission's recommendation for additional 
study concerning the appropriate location for the new SCI Center in 
VISN 16. The Draft National Cares Plan (DNCP) supported the North 
Little Rock facility but the Commission recognized that North Little 
Rock did not provide the full range of tertiary care services required 
by VA to be a proper site for an SCI Center. Additional analysis is 
also needed for the proper location of a new SCI Centers in VISN 4. 
During this study phase, preceding implementation, PYA has also 
requested that VA review the CARES model for VISN 11 to find ways of 
enhancing SCI services in this geographical area.
                   sci long-term care recommendations
    PYA believes that the CARES Commission's recommendations for adding 
SCI long term care beds in four locations in VISNs 8, 9, 11 and 22 
represents a significant first step toward solving the long-term care 
demand crisis that is looming for aging veterans with spinal cord 
injury or disease. Currently, VA has only four dedicated SCI long-term 
care facilities and three of these are on the East coast. These 
facilities are located at Brockton, MA, Castle Point, NY, Hampton, VA, 
and at the Hines Residential Care Facility in Chicago, IL and combined 
only have a total number of 125 staffed beds. SCI veterans living west 
of the Mississippi have no access to a dedicated specialized SCI long-
term care facility in their part of our country. When possible, PYA 
believes that the most ideal location of a dedicated SCI long-term care 
facility is adjacent to or in close proximity to an SCI Center. While 
the Commission recommends further VA study for the exact location of 
SCI long term care beds in VISN 8, PVA still believes that the Tampa 
SCI Center is the proper location for these much needed beds. During 
the construction phase of the SCI Center in Tampa the footprint for 
construction included plans for the later addition of an SCI long-term 
care wing. PYA recommends that VA take advantage of its advance 
planning and locate these 30 long-term care beds in conjunction with 
the Tampa SCI Center.
    PVA supports the Commission's long-term care recommendations to add 
20 SCI long term care beds in Cleveland, 20 SCI long-term care beds in 
Memphis and 30 long-term care beds at Long Beach. However, PYA does not 
support sacrificing acute SCI bed capacity to accommodate the 30 bed 
SCI long-term care bed addition at Long Beach. From the beginning of 
the CARES process, PYA supported the activation of a now vacant SCI 
ward at Long Beach to meet this need.
    Additionally, PYA would like to revisit a significant problem 
concerning the difference between acute SCI Center care and SCI long-
term residential care, that evolved as the CARES Commission process 
moved forward. As the Commission continued its fact finding work it 
became clear to PYA that the Commission had blurred the distinction 
between acute SCI Center care and SCI long-term residential care.
    As the Commission made investigative visits throughout the VA 
health care system, some members of the Commission were concerned with 
their observations concerning low occupancy rates at SCI Centers. In 
fact, the Special Disability Program section of the Executive Summary 
of the Commission's final report quotes current occupancy rates among 
VA facilities with SCI/D units as ranging from approximately 52 percent 
to 98 percent. PV A feels it was this impression that led the 
Commission to think of ways to fill unused SCI Center beds with SCI 
long-term care need. PYA has just completed reviewing VA's SCI Center 
Staffing and Bed Survey Reports of SCI centers for the twelve months of 
2003 that we would like to share with you.
    This analysis shows occupancy rates in 2003 at SCI Centers range 
from 65 percent on the low end to 121 percent on the high end. PYA 
would also like to point out that a census of SCI utilization taken on 
the last day of the month, often a Friday, can result in a lower 
average number. Also, the SCI census in many SCI Centers is 
artificially lower than patient need due to a lack of staffing in many 
facilities. We are not sure how the Commission arrived at their 
occupancy rates but would be happy to discuss our methodology at your 
convenience.
    Upon review of the Commission's final report it is clear that the 
Commission did not grasp the differences between these two modalities 
of care and felt that a mixing of these services could be easily 
accomplished. Once again PYA believes that the mixing of SCI acute care 
beds and long-term SCI residential care beds (nursing home beds) in SCI 
Centers is improper. PVA feels that re-designation of acute SCI Center 
beds to long-term care is not in the best interest of SCI veterans. PYA 
feels that an acute SCI hospital inpatient setting is not a home-like 
environment and is the wrong location to place an aging SCI veteran. 
PYA is concerned that SCI Center placement would expose these frail SCI 
veterans to a number of medical risks that would further jeopardize 
their health.
                       new sci outpatient clinics
    PYA supports Castle Point to become an SCI Outpatient Clinic upon 
completion of the Bronx expansion and consolidation of SCI services. 
This SCI Outpatient Clinic at Castle Point was included in the DNCP and 
was discussed during the Commission's final hearing but did not appear 
as a recommendation in the final report. While the omission of this 
recommendation may simply have been an error created during the rush to 
finalize and print the final report document, PV A must draw this issue 
to your attention. PYA feels Castle Point must retain SCI outpatient 
services if the Bronx expansion is to be a success.
    PVA's support of the Bronx consolidation was subject to VA 
maintaining current SCI services at Castle Point and East Orange until 
the Bronx expansion was completed. Upon completion, it was understood 
by PYA that East Orange would maintain its SCI Center role and that 
Castle Point would become an SCI Outpatient Clinic.
    PYA supports the addition of an SCI Outpatient Clinic at 
Philadelphia in VISN 4, but strongly believes that a new SCI Center in 
VISN 4 is clearly needed to meet the SCI inpatient demand in this VISN. 
PYA also supports the establishment of an SCI outpatient clinic in the 
Las Vegas area.
                           facility closures
    PVA must express its serious concern with the Commission's 
recommendation to close Brockton, West Roxbury, Jamaica Plain, and the 
Bedford VAMC in favor of building a new VA facility in the Boston area 
of VISN 1. The financial commitment for this recommendation is enormous 
not to mention the displacement effect this recommendation would have 
on thousands of veterans. For SCI veterans it would mean not only the 
closure of VISN 1's SCI Center at West Roxbury but also the closure of 
a designated SCI long-term care facility at Brockton. Obviously, a 
decision of this size will require years of careful planning if it is 
to be implemented.
    Regarding other Commission recommendations that call for facility 
closures or mission changes, we hope the Secretary understands that 
these actions may have an effect on certain SCI veterans. For some PYA 
members, who live long distances from VA's SCI hub and spoke system of 
care or in rural areas, these VA hospitals represent their only health 
care option. If VA hospital closures come to pass, VA must take action 
to ensure the availability of VA inpatient hospital care to meet the 
health care needs of these affected veterans.
    In closing, PYA would like to commend the members of the CARES 
Commission and the behind-the-scene members of VA staff for their hard 
work and dedication to improving access to VA health care for America's 
veterans. The Commission's recommendations for expanding VA SCI 
services are much appreciated.
    PYA also appreciates this Committee's diligence and oversight of 
the CARES process, there cannot be too much openness and oversight as 
VA reorders its capital assets and charts the course for the provision 
of health care for the next twenty years. I thank you for the 
opportunity to present the views of PV A and we look forward to working 
with you in the future.
    This completes my statement and I am happy to respond to any 
questions you may have.

    Chairman Specter. Thank you very much, Mr. Cowell.
    This Committee very much appreciates the participation of 
the veterans organizations, and I regret that my colleagues 
aren't here, but it is a very busy time. This was an 
extraordinary day. We customarily meet, as you know, in the 
Russell Senate Office Building, but when the votes came up we 
moved over here.
    It wasn't easy to get this room and in getting the room, I 
had to make a commitment that we would be out by 5 o'clock 
because this room has to be set up for a major reception at 6 
o'clock. But the least I can do is invite you to come to the 
reception.
    [Laughter.]
    Chairman Specter. That is also about the most I can do.
    There are questions which we would like to propound for the 
record which we will submit to you. Your full statements will 
be made a part of the record and your testimony will be 
reviewed and very carefully weighed. As you know, we do a lot 
of work through staff and through the record, and we will be 
putting the CARES Commission report under a microscope. This 
Committee is not going to stand by and see veterans' care 
reduced.
    I was a little surprised by the testimony in that, as to 
two of the Pennsylvania facilities, Altoona and Erie, they are 
not even speaking as to present recommendations. It leads me to 
question what the utility is if they are not going to really 
activate for many years into the future. By that time, 
circumstances may have changed, and we will be taking a fresh 
look at what goes on.
    This Committee appreciates your strenuous efforts to 
protect the veterans and we are with you 100 percent. Thank you 
all. That concludes our hearing.
    [Whereupon, at 5:01 p.m., the hearing was adjourned.]
  

                                  

```